In a relief to about 80 lakh taxpayers, the income tax department will erase petty tax demands on its own, CBDT chairman Nitin Gupta said on Friday.
What are petty tax demands?
Petty tax demands are 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. These demands are non-verified, non-reconciled or disputed and date back to as far as 1962.
Why are they being erased?
The finance minister Nirmala Sitharaman announced this measure in the interim Budget on Thursday as part of an effort to improve ease of living and ease of doing business for citizens. She said that these demands cause anxiety to honest taxpayers and hinder refunds of subsequent years.
How will the process work?
The CBDT chairman said that the department will extinguish such a demand from its records and issue a speaking order explaining the process to be followed. The taxpayer does not have to do anything and the department will not contact them. However, the demands will be put on the e-filing portal of the individual taxpayers so that they can check and raise any issue if needed. The department will also take care of any rectification, appeal effect or refund issue related to these demands.
How many taxpayers will benefit?
About 80 lakh taxpayers will benefit from this measure and the amount involved is about Rs 3,500 crore, Gupta said. He added that only the base figure of the demand will be the deciding factor and not the interest amount.
What is the rationale behind this measure?
Gupta said that this measure is aimed at giving relief to the taxpayers where there were mismatches between their records and the department’s records. He said that the income tax department is a very old organisation and earlier the processes were paper-based and gradually it embraced technology. Hence, issues came up when the records were being digitised.