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All outstanding personal tax demands up to Rs 25,000 withdrawn till FY 2014-15 in Budget 2024

Feb 1, 2024

Withdrawal of outstanding income tax demands: The new announcement has been made in the Budget 2024 will benefit one crore taxpayers.

The Finance Minister has announced withdrawal of all outstanding disputed direct tax demand up to Rs 25,000 in her budget speech. The announcement has been made to provide the ease of living of the taxpayers. This move will benefit 1 crore tax payers as per the speech.

As per the Budget 2024 speech, "Moreover, in line with our Government’s vision to improve ease of living and ease of doing business, I wish to make an announcement to improve tax payer services. There are a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books, causing anxiety to honest tax payers and hindering refunds of subsequent years. I propose to withdraw such outstanding direct tax demands up to Rs 25,000 pertaining to the period up to FY 2009-10 and up to Rs 10,000 for financial years 2010-11 to 2014-15. This is expected to benefit about a crore tax-payers."

The proposal to withdraw disputed income tax demands upto INR 25,000 for the period till FY 2009-10 and INR 10,000 for the period FY 2010-11 to FY 2014-15 is a commendable effort to enhance taxpayer services in Interim Budget 2024. This move should reduce burden on taxpayers, fostering a more conducive environment for compliance and economic growth - Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP.

This year after the income tax return filing, many taxpayers were getting outstanding tax demand under Section 245 in the Income-tax act, 1961.

Section 245 of the Income-tax Act, 1961 empowers the income tax department to adjust past years' income tax outstanding dues with the present year's income tax refund. The problem occurs when the Income-tax department sends a section 245 notice for a very old income tax return (ITR) as very few individuals would remember such old data. To help mitigate this issue and solve the pending section 245 income tax notice cases faster, the Income-tax department has launched the Demand Facilitation Centre (DFC) in a few states to help individuals in certain conditions for free.

The income tax department can send a section 245 notice if the current year's income tax refund is being set off against the past year's outstanding tax liability. If the current year's tax refund amount is more than the past year's tax liability, then the balance refund (tax refund less of tax liability) amount will be credited to the bank account of the individual. If the past income tax liability is more than the tax refund amount in the current year, then the additional tax liability will be imposed by the tax department.

The tax notice is available on the individual's account on the income tax e-filing portal. To read the notice, an individual will need to download it from the ITR e-filing portal. The tax notice is available in the 'e-proceedings' option under the 'pending action' tab.

After downloading the notice, an individual should check their name, PAN and other details to ensure that the notice is sent to them only and not somebody else. Tax experts say that when an individual has received a section 245 notice, one of the first things that he/she should do is check whether the correct PAN and assessment year was quoted in it or not.

[The Economic Times]

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