Such income tax refund amount will be adjusted against future income tax refund. So, if you have some refund amount due next financial year, then this year’s pending small refund will be added to it, and if the total amount exceeds Rs 100 then it will be credited to your bank account. Otherwise, if you are required to pay taxes in the next financial year you will get credit for the pending small amount and will have to pay the net amount minus this previous refund credit.
Abhishek Soni, CEO, ITR filing website Tax2Win says, “ government‘s Press note As on 5th January 2012, demands of less than Rs 100 will not be implemented but will be liable to be adjusted against future income tax refund. In practice, it has been observed that income tax refund amount of less than Rs 100 is not processed by the Income Tax Department and credited to the bank account of the individual.
The Income Tax Department notifies individual taxpayers of any income tax refund or arrears through notice section 143(1) of the Income Tax Act, 1961. This intimation notice is sent to you after you have filed and processed the verified ITR. Income tax department.
It is important to note that if any nominal income tax is due before filing of income tax return, the same should be paid before filing and verifying ITR.
For example, your self-assessment balance becomes Rs 75 after computing your total income tax due. In such a scenario, you need to deposit Rs 75 first and then file ITR.
Reason behind the release of press note by the government
The main reason why the government released the press note was that many taxpayers complained about receiving income tax notices such as Re 1, Rs 2, Rs 6 etc.
According to the press release issued by the government at the time:
It has been reported in some sections of the press that the Central Processing Centre, Bangalore is sending notices for payment of taxes as small as Rs 1, 4, 6, causing unnecessary hardship to the assessees. It has been argued that when the refund is not issued by the Income Tax Department for an amount less than Rs 100, the demand for less than Rs 100 should also not be collected.
The Income Tax Department has created a central repository of all demands for better demand management as required by the Standing Committee of Parliament and the CAG. To achieve this, all the officers were asked to fulfill the demands lying at various places. Register IRLA, TMS and manual and upload on CPC portal. This was also part of the Annual Action Plan. As a result, AO has uploaded it. During a meeting with the Bangalore Chartered Accountants’ Association, it was suggested that the taxpayers should also be informed about the same so as to enable them to take necessary action in case the outstanding demand goes wrong. The measure was intended to provide greater transparency.
Therefore, a communication has been sent to inform the taxpayers about the existing dues. 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 the Chief Commissioners to amend such entries, if found incorrect, when approached by the taxpayers. It will correct the database if the taxpayer has proof of payment etc. As per the extant procedure, demand less than Rs 100 is not enforced but is liable to be adjusted against future refunds.