Income tax dept refutes claims of arm-twisting startups to recover tax; says facts misrepresented

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April 21, 2020 2:40 PM

CBDT has so far issued close to 14 lakh refunds involving more than Rs 9,000 crore to taxpayers including individuals, proprietors, firms, corporate, startups, MSMEs, and Hindu undivided families.

The clarification came after complaints on Twitter against IT department sending demand notices.

The Central Board of Direct Taxes (CBDT) on Tuesday rejected claims on social media alleging that the income tax (IT) department is arm-twisting startups through emails to recover outstanding tax demands. The board said that such computer-generated emails are requests sent to assessees seeking an update response from them for the proposed adjustment of tax refund with the outstanding demand and that it cannot be misconstrued as a notice of recovery or arm-twisting. These emails have been sent to “nearly 1.72 lakh taxpayers including individual, businesses irrespective startups, small or large etc. and therefore to say that startups are being singled out and harassed is a total misrepresentation of facts,” Finance Ministry said in a statement.

If the assessee has paid the outstanding tax amount or if it has been stayed by the higher tax authorities, the taxpayer has to update the tax department about it through email. This is in order to ensure that these amounts are not held back by the department while issuing the refund to the assessee. The clarification came after complaints on Twitter against IT department sending demand notices.

CBDT said it had issued a consolidated circular in August last year for “hassle-free tax environment to the startups” Apart from laying down the modalities for assessment of start-ups, it also stipulated that the outstanding income tax demands relating to Section 56(2)(viib) (also known as angel tax) would not be pursued. Moreover, a startup cell was also set-up to address tax-related and other issues for start-ups.

The board has so far issued close to 14 lakh refunds involving more than Rs 9,000 crore to taxpayers including individuals, proprietors, firms, corporate, startups, MSMEs, and Hindu undivided families, it said in a release earlier this month, to help them in the current pandemic. However, CBDT said that many refunds are pending due to no response from taxpayers.

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