Income Tax Waiver Limits: CBDT Clarifies Rs 1 Lakh Cap, Exempts Future Interest

The Central Board of Direct Taxes (CBDT) has established a maximum ceiling limit of Rs 1 lakh for the waiver of eligible income tax demands. However, an exclusion from this calculation, as outlined in the CBDT's order dated February 13, 2024, is future interest, which will not be considered when determining the overall amount of income tax demand.
Income Tax Waiver Limits

Income Tax Waiver Limits (Image Source: iStockphoto)

The Central Board of Direct Taxes (CBDT) has established a maximum ceiling limit of Rs 1 lakh for the waiver of eligible income tax demands. However, an exclusion from this calculation, as outlined in the CBDT's order dated February 13, 2024, is future interest, which will not be considered when determining the overall amount of income tax demand.
CBDT said, "Consequent to the aforesaid remission and extinguishment of entries of outstanding demand, there shall not be requirement of calculation of interest on account of delay in payment of demand under sub-section (2) of section 220 of the Income-tax Act, 1961 or corresponding provisions of Wealth-tax Act, 1957 and Gift-tax Act, 1958 and therefore, the same shall not be considered for the purpose of determining the ceiling of Rs 1,00,000 (Rupees one lakh)."
The intricacies of income tax provisions reveal that if a tax demand remains unpaid for more than 30 days from the date of issuance, a monthly interest rate of 1% is applied for the delayed period under section 220. Tax experts argue that including this interest amount in the calculation could render many taxpayers ineligible for the waiver. Nevertheless, there is a call for further clarification from the CBDT regarding the computation of interest.
While the prescribed limit for the waiver stands at Rs 1 lakh per taxpayer, it's crucial to note that the maximum waiver per tax demand until Assessment Year 2010-11 is capped at Rs 25,000.
As reported by The Economic Times, Mihir Tanna, Associate Director-Direct Tax at S.K Patodia LLP, a Chartered Accountancy firm emphasised that no interest will be factored in for the non-payment of tax demand. However, Tanna points out a nuanced scenario where a tax demand already raised, including accrued interest, might not be eligible for waiver if it surpasses the overarching limit of Rs 1 lakh.
To illustrate, if individual A has an outstanding demand of Rs 20,000 for Assessment Year 2005-06 with no accrued interest to date, it is likely that the demand for A will be nullified as it falls below the specified limit. Conversely, individual B, with an outstanding demand of Rs 20,000 for the same assessment year, coupled with an interest charge of Rs 10,000 to date, may not witness the extinguishment of the demand, given that it exceeds the stipulated limit.
End of Article
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news