Government to withdraw previous direct tax claims, offering relief to 10 million of taxpayers

While presenting the Interim Budget 2024-25 on Thursday Union Finance Minister Nirmala Sitharaman proposed the withdrawal of outstanding direct tax demands. This is expected to benefit 10 million of taxpayers.

“There are a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as 1962, which continue to remain on the books, causing anxiety to honest taxpayers and hindering refunds of subsequent years,” Sitharaman said.

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“I propose to withdraw such outstanding direct tax demands up to Rs 25,000 pertaining to the period up to financial year 2009-10 and up to Rs 10,000 for financial years 2010-11 to 2014-15. This is expected to benefit about a crore of taxpayers,” she added.

Mini Nair, Chief Financial Officer, Geojit Financial Services, said, "Eliminating outstanding tax demands below 25,000 up to FY 2009-10 and below 10,000 up to FY 2014-15 is a welcome move. This shows that the government is using their database effectively. While the Budget speech refers to the increase in the number of taxpayers by 2.4times and of a good direct tax collection and a stable GST implementation, that positivity is yet to be passed on to the middle class. Hence there can be some disappointment in personal taxation among the salaried class. As this is an interim budget, let’s hope that there would be scope for realistic reduction on individual tax in the full budget."

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“The proposal to withdraw disputed income tax demands up to Rs 25,000 for the period till FY10 and Rs 10,000 for the period FY11 to FY15 is a commendable effort to enhance taxpayer services in Interim Budget 2024. This move should reduce the burden on taxpayers, fostering a more conducive environment for compliance and economic growth,” said Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP.

Tapati Ghose, Partner, Deloitte India, said, "Cleansing the cobwebs in the tax systems – Individuals are plagued with old demand claims that are non-verified, petty, non-reconciled or disputed - In an unexpected move, the FM announced withdrawal of demand for past years, of up to Rs. 25,000 pertaining to upto FY 2009-2010 and upto Rs, 10,000 for FY 2010- 2011 – 2014- 2015."