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I-T dept will erase petty tax demands on its own, says CBDT chairman

New Delhi, Feb 2, 2024 

He said only the base figure of the demand (Rs 25,000 and Rs 10,000) will be the "deciding factor" for such cases and not the interest amount riding on the basic demand over the years 

The income tax department will "erase" petty tax demands pending against about 80 lakh taxpayers on its own and issue a "speaking order" explaining the process to be followed, CBDT chairman Nitin Gupta said Friday, a day after the measure was proposed in the interim Budget.

Union Finance Minister Nirmala Sitharaman had on Thursday declared the government's proposal to withdraw outstanding direct tax demands up to Rs 25,000 till 2009-10 fiscal and up to Rs 10,000 for financial years 2010-11 to 2014-15.

This was being done, she said, as part of an effort to improve ease of living and ease of doing business for citizens. The finance minister added that there were "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 taxpayers and hindering refunds of subsequent years.

"We will erase these demands, we will extinguish such a demand from the records of the tax department. The taxpayer does not have to do anything and we will not be getting in touch with them (taxpayer) at all."

"This process will not be adverse to the assessee," Gupta told PTI in a post-Budget interview.

However, he said, such demands will be put on the e-filing portal of the individual taxpayers so that they can also have a look and if there is any issue, the department will resolve it, the top tax department officer said.

The Central Board of Direct Taxes (CBDT) is the administrative authority for the I-T department.

Gupta added, "If the taxpayer has an issue with regard to these demand cases like rectification or there could be a case where appeal effect has not been given or a refund issue is pending, then it will be taken care of."

"We will come out with a speaking order that will explain everything...," he said.

About 80 lakh taxpayers will benefit from this measure and the amount involved here is about Rs 3,500 crore, the CBDT chief said.

He said only the base figure of the demand (Rs 25,000 and Rs 10,000) will be the "deciding factor" for such cases and not the interest amount riding on the basic demand over the years.

"This is basically a measure to give relief to the taxpayers where there were mismatches...like the taxpayer claiming that he has paid the tax but we (I-T department) don't have the records and even the taxpayer may not have the records and hence grievances came up," Gupta said.

Due to this, the entire process of issuing refunds is getting slowed down.

The income tax department is a very old organisation and earlier the processes were paper-based and gradually it embraced technology and hence issues came up when the records were being digitised, he said.

"The government has now taken a call that smaller demands can be extinguished so that these do not come up on a recurring basis and affect our entire process. This way we are also able to clean up our books and this decision is in that direction," Gupta said.

Talking about another measure brought in by the department to fasten the issuance of refunds, the CBDT chairman said it has been decided to send the refund in the second-mentioned bank account of a taxpayer in certain held up cases where the first bank account is not working.

The I-T department, as of October last year, has been working on about 35 lakh cases were refunds were held up due to a variety of issues like mismatch in taxpayers' vital details or missing validation of their bank accounts.

The department has made good progress in this regard since October and these numbers have "shrunk significantly", Gupta said.

What the department is doing in these cases now is that if a taxpayer's primary bank account is not responding or even if the taxpayer is not responding, it will utilise the second bank account that is provided by the taxpayer in their ITR to issue the refund. The department has "tweaked" the system to issue refund to the second bank account, Gupta said.

Asked about the response of taxpayers to the new tax filing regime, Gupta said that while the correct figures in this context will only be known by July 31 of this year, the department estimates that "at least 60 per cent" of the individual filers should be switching over to the new regime because of benefits like broader slabs, lower tax rates and even reduced surcharge.

Under the new tax regime, no deductions will be allowed to an individual and they will be offered a flat rate of tax under different applicable slabs.

[Press Trust of India]

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