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Income tax refund of this amount will not be paid by tax dept
January, 21st 2021

Did you get an intimation from the income tax department after processing of your income tax return, for a tax demand or tax refund amount of less than Rs 100? If you have, then you are neither liable to pay such tax demand amount nor will you receive such refund amount in your pre-validated bank account. Such tax demand dues will be adjusted against future income tax refunds.

Here is why.

"The Government vide a press note dated January 05, 2012, clarified that demand of less than Rs 100 would not be enforced but is liable for adjustment against future refunds. Thus, any tax dues less than Rs 100 would be carried forward for the purpose of set-off against the refunds of any future years," says Dr Suresh Surana, founder, RSM India, a tax consultancy firm.

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 Rs 100.


Corroborating this view, Abhishek Soni, CEO and founder, Tax2Win.in, an ITR filing firm says, "Practically, we have observed that if the amount of income tax refund is below Rs 100 then it is not processed by the income tax department. Also, if the tax demand amount is below Rs 100 then also deposit ..

Surana says, "There is no extant procedure provided either under the Income-tax Act or by way of any notification or circular for the treatment of such demand of less than Rs 100, however, practically payment towards such miniscule demand of earlier year is not enforced, unless there is a refund in the subsequent year/s and the demand is proposed to be adjusted against such refund."

"Do keep in mind that if there are taxes payable before the filing of ITR, say Rs 50, then such payment of taxes must be made or else you will not be able to file ITR," says Soni.

Why was press note issued by the government in 2012
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 Re 1, Rs 4, Rs 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 Rs 1, 4, 6, causing unnecessary hardship to assessees. It has been argued that when refunds for amounts less than Rs 100 are not issued by the income tax department, then the demand for less than Rs 100 should also not be collected," said the press release issued at that time.


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 a 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 Rs 100 is not enforced but is li ..

 
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