75-80 lakh PAN holders to benefit from withdrawal of legacy tax demands

Around 75 to 80 lakh tax assesses may benefit from the central government’s decision to withdraw legacy outstanding tax demands up to ₹25,000 pertaining to certain specified periods.

The decision, announced by Finance Minister Nirmala Sitharaman while presenting the interim Budget 2024-25 on February 1 covers over one crore demand notices issued to 75-80 lakh unique PAN numbers, Nitin Gupta, chairman, CBDT said. The quantum of such demands could be in the range of ₹3,500 crore to ₹3,600 crore. The cumulative pending tax demand could run into a few lakh crores, he added.

The FM had said that the move was in line with the government’s vision to improve ease of living and ease of doing business. “There are a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books, causing anxiety to honest tax payers and hindering refunds of subsequent years. I propose to withdraw such outstanding direct tax demands up to ₹25,000 pertaining to the period up to financial year 2009-10 and up to ₹10,000 for financial years 2010-11 to 2014-15”, the FM had stated.

The CBDT chairman explained that many of these legacy demands were lying as entries in physical registers as at one point in time, before it got transferred to digital form. “There could be some errors, some non-availability of records, reconciliation issues with these demands. That is why FM said we would like to extinguish small, old demands of a certain time period, so that our books get clear”, Gupta said.

The current annual direct tax collection is estimated to be ₹19.45 lakh crore.

Gupta said that CBDT will try to resolve the demands that will still remain. “We are working on that also to see how to address those demands, how to collect wherever these are collectible and what should be done. How to expedite the appeals where the appeals are pending so that process is already taken into account is also thought through. We are looking at whatever demand we have on our registers in a holistic manner”, Gupta said.

Incidentally, the taxpayer will not have to do anything here as all the demands that quality the criteria set by the government will be extinguished automatically.

“Once we do this exercise, we would like to put the entire demand position on the e-filing portal for the particular taxpayer. The person can log in and look at the demands that are outstanding, which year, when it was raised, the demand history. With this the taxpayers hassle will go away, and the entire department can focus on more productive, more useful work” Gupta said.