CBDT Order: Waiver of Outstanding Tax Demands as of January 31, 2024, Capped at Rs. 1 Lakh per Assessee

Order: F.no. 375/02/2023, dated 13-02-2024

Following the Union Budget 2024 announcement by Finance Minister Nirmala Sitharaman, the Central Board of Direct Taxes (CBDT) has issued an order (F.no. 375/02/2023, dated 13-02-2024) to waive and extinguish tax demands under the Income Tax Act, 1961, Wealth Tax Act, 1957, or Gift Tax Act, 1958 [“Acts”].

The order details the process of extinguishing demands for various assessment years, specifying the monetary limit for outstanding tax demands and the maximum ceiling eligible for waiver for each assessee. The key highlights of the order are as follows:

a) Monetary Limit for Waiver of Demand:

  • Up to Assessment Year 2010-11, demands up to Rs. 25,000 per entry are eligible for waiver.
  • From Assessment Year 2011-12 to AY 2015-16, the waiver applies to demands up to Rs. 10,000 per entry.

b) Maximum Ceiling of Rs. 1 Lakh:

  • Remission and extinguishment of eligible demands are capped at Rs. 1,00,000 per assessee, irrespective of the total eligible amount across assessment years.

c) No Waiver for TDS/TCS Demands:

  • The CBDT specifies that the waiver of demand does not apply to demands raised against tax deductors or collectors under the TDS or TCS provisions of the Income Tax Act, 1961.

d) Tax Demand Components:

  • Tax demand includes the principal tax amount under the Act, along with any interest, penalty, fees, cess, or surcharge as per Act provisions, subject to the specified ceiling limit.

e) Exclusion of Interest on Delayed Payment:

  • Interest under section 220(2) is not considered when calculating the demand entry amount or the ceiling limit of Rs. 25,000, Rs. 10,000, or Rs. 1,00,000, respectively.

f) No Right to Claim Credit or Refund:

  • Remission of outstanding demands does not entitle the assessee to claim credit or refund under the Income Tax Act or any other legislation.

g) No Impact on Criminal Proceedings:

  • The waiver of demand does not affect ongoing or completed criminal proceedings against the assessee and does not provide any benefit, concession, or immunity under such proceedings.

Guide to choose Mutual Fund?

With over 44AMC’s and more than 2500 schemes, choosing a mutual fund is not easy task. Choosing mutual fund is like a finding a life partner that could either boost or wipe out your wealth. So, The Question remains How to select Mutual Funds?  This is the most common yet most complex question to answer. One’s decision should not be only based on Mutual fund rankings as these ranking by various agencies are biased and these are based on single factor i.e. past performances. It is not a magical wand that could guarantee returns.  The decision to select Mutual fund scheme is not an easy task but one should have the basic idea.

Time Horizon and Risk Appetite

What is reason for your investment? Investor should have investment goal in the mind whether a person is selecting a scheme for higher education of children, medical treatment, foreign trip, retirement planning. The two things should be kept in mind before investing is time horizon for investment and risk-taking capacity of individual.  Many of us think that Debt funds are risk free but considering the current COVID crisis Debt funds can even deliver no return or either wind up like Franklin Templeton. At this step we can make a decision whether one need to invest for short term or long term depending on their risk appetite.
The market may be volatile in Short run but can give provide high earning over a longer time. The table below is guide to a fund type by taking time horizon and Risk tolerance into consideration.

Time Horizon/RiskLow RiskMedium RiskHigh Risk
Short Duration (up to 2 years)Liquid Funds, Ultra Short-duration FundsShort-duration FundsArbitrage Funds
Medium Duration (2 years – 3 years)Short-duration FundsBalanced Advantage FundsEquity Hybrid Funds
Long Duration (3 years and above)Large Cap FundsMulticap FundsMid Cap Funds, Small Cap Funds

Assets Under Management (AUM) and Asset management companies (AMC’s) reputation


AUM sometimes called as Funds under management (FUM) measures the total market value of all financial assets. In simple words it means how many subscriptions the scheme has received. The bigger the size the bigger is confidence of investor. Also, AMC’s deploy their best fund managers for the Mutual fund with high FUM. So, on this basis one can eliminate the Funds with below average AUM.
AMC invest pooled funds from Clients. It is a company which manages a mutual fund. One can look at number of qualitative factors like age of fund house, the overall AUM, No. of schemes run by AMC and AMC’s reputation. A trusted AMC will help you to park your investments smartly and wisely.

Expense Ratio and Exit Load


Expense ratio is the fee charged by the AMC for the management, operations, promotions and distribution of fund. The figure of expense ratio varies from 0.6% to 2.25%. While selecting a fund one should look at expense ratio as it affects the overall return of Scheme. The expense ratio up to 1.6% is considered good.


Another thing to consider is exit load, Investor can be charged up with some fee called Exit Load if investor tries to liquidate its investment before a certain maturity period. If investment is made with giving due consideration to exit load it can eat up all your return as it can be as high as 3%. The scheme should have minimal exit load.

Performance and Rankings
One should also assess the mutual fund scheme on the basis of Performance across category and consistency. Historically, good funds have always given attractive past performance. However mutual fund in its risk factors will state that past performance is not a guarantee of future performance. The fund should be capable of providing a consistent return. Further Mutual Fund performances should be compared with its peers. The comparison should be same category. For example, mid cap should be compared with other mid cap funds not against small cap or large cap funds. Lastly, Mutual Fund rankings can also be considered. CRISIL, Value Research, Morning Star, ICRA are various rating agencies. They evaluate mutual fund schemes on various factors. On this parameter one can drop mutual fund schemes with below average ratings.

 

Lastly, one should not “Invest and forget”. The fund should be constantly monitored and rebalancing in portfolio should be done based on economic conditions.

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