The Income Tax (IT) Department has said that income tax assessees receiving notices for payment of tax less than Rs 100 should not respond to them, as the amount would be adjusted against future refunds.

The department has issued the clarification in response to reports that the Central Processing Center (CPC), Bangalore, is sending notices for payment of tax arrears as small as Re 1, Rs 4 and Rs 6 and thus causing hardship to assessees.

"It has been reported in some sections of the press that the CPC 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 stated that when the refunds for amounts less than Rs 100 are not issued by the IT Department, then the demand for less than Rs 100 should also not be collected," the CBDT said in a press note.

The I-T Department, it said, had created a central repository at Bangalore for better demand management and asked all officers to collate demand lying at various places.

"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," it added.

"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 liable for adjustment against future refunds," the press note said.