New Guidelines by CBDT Simplify Tax Offence Compounding in India
The Central Board of Direct Taxes (CBDT) has introduced new guidelines to simplify the compounding of offences under the Income-tax Act, 1961. Announced by the Ministry of Finance, these changes aim to make the process easier and more accessible for taxpayers.
Key Changes in the Guidelines
The guidelines eliminate the categorization of offences, allowing taxpayers to file applications without a limit on the number of times. If previous applications had defects, applicants can now submit fresh applications after corrections.
Offences under sections 275A and 276B can now be compounded without the previous 36-month time limit. For companies and Hindu Undivided Families (HUFs), the main accused is no longer required to file the application, simplifying the process for co-accused as well.
Rationalization of Charges
Compounding charges have been rationalized, with interest charges for delayed payments abolished. Rates for offences like TDS defaults have been reduced to a single rate of 1.5% per month. The calculation method for non-filing of returns has been simplified, and co-accused individuals will not face separate charges.
These guidelines apply to both pending and new applications, replacing all previous guidelines. This initiative is part of the government’s efforts to simplify tax compliance and promote ease of compliance for businesses and individuals.
Doubts Revealed
CBDT -: CBDT stands for the Central Board of Direct Taxes. It is a part of the Indian government that looks after the rules and regulations related to income tax in India.
Compounding of offences -: Compounding of offences means resolving legal issues by paying a fee instead of going through a lengthy court process. It helps people or businesses settle their tax-related mistakes more easily.
Income-tax Act, 1961 -: The Income-tax Act, 1961 is a law in India that tells people and businesses how much tax they need to pay to the government based on their income.
Sections 275A and 276B -: Sections 275A and 276B are specific parts of the Income-tax Act that deal with certain tax-related offences. The new guidelines allow these offences to be resolved without worrying about a time limit.
TDS defaults -: TDS stands for Tax Deducted at Source. TDS defaults happen when the required tax is not deducted or paid on time. The new guidelines have made it cheaper and easier to fix these mistakes.