Income tax refund/demand of less than ₹100 won’t be collected/demanded by Dept

The Government vide a press note in 2012 has clarified that demand of less than ₹100 would not be enforced but is liable for adjustment against future refunds. Thus, any tax dues less than ₹100 would be carried forward for the purpose of set-off against the refunds of any future years. Sec 143 (1) notices sent by the income tax department to taxpayers after processing their returns also indicate the above in cases where there is a refund or tax demand of less than ₹100. 

The press note was issued by the government as many taxpayers in 2012 received tax demand notices from the department for the payment of even minuscule tax dues of ₹1, ₹4, ₹6 etc. It has been reported in some sections of the press that the Central Processing Centre, Bangalore is sending notices for payment of taxes which are as small as ₹1, 4, 6, causing unnecessary hardship to assessees. It has been argued that when refunds for amounts less than ₹100 are not issued by the income tax department, then the demand for less than ₹100 should also not be collected.

The press release further said the income tax department has created a central repository of all demands for better demand management as required by Standing Committee of Parliament and C&AG. To achieve this, all officers were asked to collate demand lying at various places viz. IRLA, TMS and manual registers and upload onto CPC portal. This was also part of the annual action plan. Consequently, AOs have uploaded the same. During a meeting with Bangalore Chartered Accountants association, it was suggested that taxpayers should also be informed about the same so as to enable them to take necessary action if the outstanding demands were incorrect.

This measure was aimed at providing greater transparency. Therefore, a communication has been sent to taxpayers informing them about existing arrears. It may be clarified that this communication is not a demand notice. This measure is, in fact, an assessee -friendly exercise. The department has also written to all chief commissioners to amend such entries, if found incorrect, when approached by taxpayers. This would correct the database if a taxpayer has proof of payment etc. As per extant procedure, demand of less than ₹100 is not enforced but is liable for adjustment against future refunds.




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