Revised Guidelines Issued For Compounding Of Offences Under Income Tax Act

New Delhi: The Central Board of Direct Taxes (CBDT) has taken steps in conformity with the Central government’s policy of facilitating ease of doing business and decriminalisation of offences.

CBDT has issued revised Guidelines for compounding of offences under the Income Tax Act, 1961, dated September 16, 2022, with reference to various offences covered under the prosecution provisions of the Act.

Among the major changes made for the benefit of taxpayers are making offence punishable under Section 276 of the Act as compoundable.

The scope of eligibility for compounding of cases has been relaxed. The previously non-compoundable case of an applicant who has been convicted with imprisonment for less than 2 years has now been made compoundable. The discretion of competent authority has also been restricted.

The time limit for acceptance of compounding applications has been increased from 24 months to 36 months — from the date of filing of complaint. Procedural complexities have also been reduced/simplified.

Upper limits for compounding fee, covering defaults across several provisions of the Act, have been introduced.

Additional compounding charges of penal interest @ 2% per month up to 3 months and 3% per month beyond 3 months have been reduced to 1% and 2%, respectively.

Check revised guidelines for compounding of offences at —

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