Petty dispute relief scheme: Govt to waive interest, fee, penalty, too

The withdrawal does not entitle taxpayers to take credit or refund

Interest, penalty, fee, cess, and surcharge on taxpayers, besides the principal amount, will be withdrawn under the petty dispute relief scheme, which was announced in the Interim Budget for 2024-25. But the remission of these demands would not end criminal proceedings, either started or planned, against the tax assessee.

The Central Board of Direct Taxes (CBDT) has issued an order stating that the remission of petty demands will not include the demands of tax deducted at source and tax collected at source raised on deductors and collectors of income tax. This withdrawal does not entitle taxpayers to take credit or refund.

The scheme is set to be implemented by the Bengaluru-based Directorate of Income Tax (Systems) at the Centralised Processing Centre (CPC), preferably within two months. It will be limited to Rs 1,00,000 per assessee.

Sandeep Sehgal, tax partner at AKM Global, said that limiting the execution time to two months showcases the proactive move of the tax authorities aimed at helping taxpayers. The interest rate for those who have delayed payment will not be factored into the calculation of the Rs 1,00,000 ceiling.

 Union Finance Minister Nirmala Sitharaman had announced the withdrawal of past tax demands up to Rs 25,000 for 2009-10 and Rs 10,000 for 2010-11-2014-15 in the Interim Budget for 2024-25. The demand will be withdrawn from the earliest assessment year to the subsequent assessment years and will end when it aggregates to Rs 100,000.

 In addition to the Income Tax Act, petty demands under the Wealth Tax Act and the Gift Tax Act will be withdrawn. Maneesh Bawa, a partner at Nangia Andersen India, advises taxpayers to access their online accounts to verify the status of extinguished demands.