Guidelines for Compounding of Offences under Income Tax Act, 1961

Notification No.: 285/08/2014-IT (Inv.V)/163

Notification Date: 17th October 2024

Relevant Act/Rule : Income Tax, 1961

Relevant Section / Rule: Section 279(2), read with Section 2(15A) and 2(21)

CBDT has reviewed and issued revised guidelines for compounding of offences under Income Tax Act, 1961.

 

Scope of the Guidelines to prosecutions under Income Tax Act, 1961

 

These guidelines shall be applicable w.e.f. 17th October 2024 and shall apply to:

  1. Applications filed after its issuance
  2. Applications already filed but not disposed.
  3. Applications pending on the date of issuance of this guidelines, if compounding charges have already been determined and intimated but not fully paid, then compounding charges shall be re-determined, provided they are lower as per these guidelines.
  4. Applications may be filed in case applications filed under earlier guidelines were rejected on grounds of curable defects such as –
    • Non-payment of outstanding tax, interest, penalty, other sum related to offence
    • Application filed in incorrect proforma
    • Mention of incorrect assessment year
    • Mention of incorrect section under which offence was committed
    • Non-payment or short payment of compounding charges
    • Non-submission of undertaking

 

Conditions for Consideration of Compounding Application

 

Offences may be considered for compounding if all the following conditions are satisfied:

  1. Compounding Application
  2. Compounding Application Fees
  3. Payment of all taxes, interest and other sums relating to offence for which compounding sought
  4. Undertaking by the Applicant
  5. Withdrawal of Appeals
  6. Consolidation of Offences

 

Revival of a defective application: It has been specified that any application if found defective due to curable defects, may be revived if such defects are cured within one month from the date of intimation of such defects.

 

Offences compoundable with the approval of higher authority: These guidelines have specified certain offences which can be compounded only with the approval of Chairman, CBDT.

 

Competent Authority to Compound an Offence: These guidelines have specified that Pr. CCIT / CCIT / Pr. DGIT / DGIT are the competent authorities for compounding of offences.

 

Compounding Procedure: These guidelines have specified detailed procedure to be followed for compounding of an offence.

 

Compounding Charges: These guidelines have specified Compounding Charges to be paid for compounding of an offence.

Disclaimer: The information contained in this Article is intended solely for personal non-commercial use of the user who accepts full responsibility of its use. The information in the article is general in nature and should not be considered to be legal, tax, accounting, consulting or any other professional advice. We make no representation or warranty of any kind, express or implied regarding the accuracy, adequacy, reliability or completeness of any information on our page/article. 

To stay updated Subscribe to our newsletter today

Explore other Legal updates on the 1-Comply and follow us on LinkedIn to stay updated 

Schedule A Demo