CBDT drops small tax demands but not TCS, TDS claims

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₹25,000 for assessment year up to 2010-11 and demands up to ₹10,000 from the next year up to assessment year 2015-16 will be extinguished. However, any criminal action initiated or planned under any law will not be dropped. Any tax demand raised against taxes collected or deducted at source (TCS or TDS) will not be eligible for this relief, CBDT said.

TCS and TDS leave a trail of transactions that the tax authority uses to keep an eye on transactions in the economy and to prevent any under-reporting of income. Over the years, TDS and TCS have become an important mode of direct tax collection. The maximum benefit per taxpayer will be withdrawal of demands totaling ₹1 lakh, the CBDT order said.

With the remission of the outstanding tax demand under the scheme, the provisions for levying interest for delayed tax payments under Section 220 (2) of the Income Tax Act will not apply and the same will not be considered in computing the upper limit of tax relief of ₹1 lakh per taxpayer. CBDT also explained in the order that tax liability arising from a provision in the Income Tax Act that gives an inclusive definition of income including subsidy, grant or cash incentive or duty drawback will also be eligible for the relief of remission. The tax authority clarified that the waiver or cancellation of the tax demand does not entitle taxpayers to any claims for credit or refunds.