CBDT simplifies compounding of tax offenses

New Delhi- In a move aimed at simplifying the compounding of offenses under the Income-tax Act, 1961, the Central Board of Direct Taxes (CBDT) issued revised guidelines on October 17, 2024. These guidelines supersede all existing ones and will apply to both pending and new applications from the date of issue.

The revised guidelines aim to reduce complexities, simplify the procedure, and lower compounding charges. Key changes include eliminating the categorization of offenses, removing the limit on the number of applications filed, and allowing fresh applications after curing defects. Additionally, offenses under sections 275A and 276B of the Act can now be compounded, and the 36-month time limit for filing applications from the date of complaint has been removed.

To further facilitate the process, the requirement for the main accused to file the application has been eliminated for companies and HUFs. Now, the offenses of both the main accused and any or all co-accused can be compounded by paying the relevant charges by either the main accused or any co-accused.

The CBDT has also rationalized compounding charges by abolishing interest on delayed payments, reducing rates for various offenses (including TDS defaults), and simplifying the calculation basis for non-filing of returns. For instance, the multiple rates of 2%, 3%, and 5% for TDS defaults have been reduced to a single rate of 1.5% per month.

These revised guidelines represent a step towards simplifying procedures and promoting ease of compliance for taxpayers. The complete guidelines are available on the Income Tax India website at https://www.incometaxindia.gov.in.