What did FM Sitharaman say on old tax demands? Whom this will help?

Have outstanding tax demands before the financial year 2010? Finance Minister Nirmala Sitharaman has some good news for you. Sitharaman in the interim Budget speech on Thursday said the Centre will no longer seek disputed direct tax demands under Rs 25,000 till the 2009-2010 financial year. The Government of India will also no longer look to claim similarly disputed amounts under Rs 10,000 from the financial year 2010-2011 to the 2014-2015 financial year. But what did she say exactly? And whom will this help? Let’s take a closer look: As per News18, Sitharaman in her speech said the government has proposed to withdraw old disputed direct tax demands of up to Rs 25,000 till FY10 and Rs 10,000 from 2010-11 to 2014-15. Sitharaman said the withdrawal of tax demand will benefit one crore taxpayers.

As per Indian Express, the measure could bring relief to one in eight taxpayers.

The Centre has announced a programme to resolve “disputed direct tax demand” as far back as 1962, as per the newspaper. “In line with our Government’s vision to improve ease of living and ease of doing business, I wish to make an announcement to improve taxpayer services. 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,” Sitharaman was quoted as saying. “I propose to withdraw such outstanding direct tax demands up to twenty-five thousand rupees (Rs 25,000) pertaining to the period up to financial year 2009-10 and up to ten-thousand rupees (Rs 10,000) for financial years 2010-11 to 2014-15. This is expected to benefit about a crore taxpayers,” she said. The newspaper reported that pending tax demands were creating a backlog when it comes to refunding taxpayers’ money. This is because the Income Tax department was not processing complete refunds for the current assessment year if a previous demand was pending. The programme is expected to lay this issue to rest. The CBDT chairman Nitin Gupta in October 2023 told the newspapers taxpayers  were receiving demands as far back as 2010-11 at the time of issuance of refunds. This, as the department shifted from paper-based records to digital ones – which resulted in some previous tax demands showing up. The finance minister added that since 2014 the number of taxpayers has swelled by nearly two-and-a-half times, according to News18.

She added that direct tax collection has tripled since 2014.

The processing time of tax returns has been reduced from 93 days in FY14 to 10 days and refunds have been made faster, she added. The focus of the government has been to improve services for taxpayers, Sitharaman said. A record of 8.18 crore tax returns were filed until 31 December compared to 7.51 crore I-T returns filed at the end of 31 December, 2022, according to the Central Board of Direct Taxes (CBDT). That figure was already nine per cent more than the total Income Tax Returns (ITRs) filed for 2022-23, the CBDT said in a statement. The total number of audit reports and other forms filed during the period is 1.60 crore, as against 1.43 crore audit reports and forms filed in the corresponding period of the preceding year, the CBDT said. It is heartening to note that a large number of taxpayers did their due diligence by comparing data of their financial transactions by viewing their Annual Information Statement (AIS) and Taxpayer Information Summary (TIS), it added. With inputs from agencies