CBDT Simplifies Compounding Guidelines for Income-Tax Offences

The Central Board of Direct Taxes (CBDT) in India has issued new guidelines to simplify the compounding of offences under the Income-tax Act, 1961. These guidelines, announced on October 17, aim to reduce complexities and lower charges for stakeholders.

Key Changes in the Guidelines

The revised guidelines replace all previous ones and apply to both pending and new applications. They eliminate the categorization of offences and remove the limit on the number of times applications can be filed. Additionally, they allow fresh applications after curing defects, which was not allowed before.

Offences under sections 275A and 276B can now be compounded, and the 36-month time limit for filing applications has been removed. Companies and Hindu Undivided Families (HUFs) can now compound offences without the main accused filing the application.

Rationalization of Compounding Charges

The guidelines also rationalize compounding charges by abolishing interest on delayed payments and reducing rates for various offences. For instance, TDS defaults now have a single rate of 1.5% per month, down from multiple rates of 2%, 3%, and 5%. The basis for calculating charges for non-filing of returns has been simplified.

These changes are part of the government’s efforts to simplify procedures and promote ease of compliance for taxpayers.