CBDT allows tax officials to waive or reduce interest due from assessee
New Delhi: In a recent development, the Income Tax Department has granted tax officials the authority to waive or reduce the interest payable by taxpayers who fail to meet tax payment deadlines, provided specific conditions are met. This initiative, introduced through a Central Board of Direct Taxes (CBDT) circular on November 4, aims to ease the financial burden on taxpayers experiencing genuine hardship.
Under Section 220(2A) of the Income Tax Act, taxpayers who do not pay the tax amount specified in demand notices are liable for an interest charge of 1 per cent per month on the delayed amount. The Act empowers high-ranking tax officials, including Principal Chief Commissioners (PrCCIT), Chief Commissioners (CCIT), Principal Commissioners (PrCIT), and Commissioners, to decide on waiving or reducing this interest.
The CBDT circular specifies monetary thresholds for interest waivers based on the official's rank. PrCCITs can decide on cases where the interest due exceeds Rs 1.5 crore. For interest amounts between Rs 50 lakh and Rs 1.5 crore, the decision rests with CCITs, while PrCITs and Commissioners can handle requests involving interest due up to Rs 50 lakh.
The waiver or reduction of interest under Section 220(2A) is conditional on three criteria: the interest payment must cause genuine hardship to the taxpayer, the delay in payment must be due to circumstances beyond the taxpayer’s control, and the taxpayer must have cooperated during the inquiry or recovery process.
Sachin Garg, Partner at Nangia & Co LLP, highlighted the benefit of this move, noting, "The CBDT’s decision is expected to facilitate faster disposal of taxpayer applications for interest waivers or reductions, making the process more taxpayer-friendly."
Rajat Mohan, Senior Partner at AMRG & Associates, emphasised that the circular’s tiered thresholds will streamline decision-making. "Setting thresholds empowers officials to make quicker decisions, promoting transparency and reducing administrative delays," he said.
This change aligns with the CBDT’s efforts to improve administrative efficiency, offering timely relief to taxpayers facing unforeseen difficulties in fulfilling their tax obligations.
with agency inputs
