The Central Board of Direct Taxes (CBDT) has decided to offer a discretionary waiver of interest on unpaid income tax dues arising from a demand notice — but set monetary limits on the relief to taxpayers.
Under section 220(1) of the Income Tax Act, any amount, other than advance tax, specified as payable in a notice of demand under section 156 must be paid within 30 days of the service of the notice.
Under section 220(2) of the Act, the failure to pay the tax amount specified in a demand notice will result in the taxpayer being charged interest at the rate of 1 per cent per month for the duration of the delay.
The new circular introduces monetary limits specifically for Section 220(2) waivers.
Under this circular, waivers up to ₹50 lakh can be approved by principal commissioners, those from ₹50 lakh to ₹1.5 crore by chief commissioners, and any amount above ₹1.5 crore by principal chief commissioners.
“The shift to include Section 220(2) under specified monetary limits reflects a strategic alignment in tax administration and will likely improve the efficiency and responsiveness of waiver-related resolutions,” said Sandeep Bhalla, Partner, Dhruva Advisors.
Nangia & Co LLP partner Sachin Garg said: “This is expected to facilitate expeditious disposal of applications by a taxpayer. It may be noted that there is no change in the specified conditions that are required to be met for seeking such a reduction.”
AMRG & Associates senior partner Rajat Mohan said this will promote efficiency in granting interest relief.
“By setting thresholds based on the waiver amount, it empowers officials at different levels to make quicker decisions, enhancing consistency across cases and reducing administrative bottlenecks.
