There is big news for those who pay income tax. The Central Board of Direct Taxes (CBDT) has issued a circular, in which some exemption has been given to the tax officials and taxpayers can benefit from it.
If the taxpayer does not pay the tax on time, then he also has to pay interest on it. But now according to the tax demand notice, some exemption has been given to the tax officials regarding the interest charged for not paying the due tax. According to this exemption, the officials can now reduce the interest charged on the tax, or even waive it. Keep in mind that this exemption has been given with some conditions.
Interest of more than Rs 1.5 crore can be waived
CBDT has set a monetary limit for waiving or reducing interest on tax payments. According to the circular, the Principal Chief Commissioner of Income Tax (PrCCIT) can reduce or even waive the outstanding interest of more than Rs 1.5 crore. At the same time, if a taxpayer has outstanding interest between Rs 50 lakh and Rs 1.5 crore, then the Chief Commissioner of Income Tax (CCIT) rank officer can decide to waive or reduce it.
At the same time, the Principal Commissioner of Income Tax (PrCIT) or Income Tax Officers have the right to take a decision on outstanding interest up to Rs 50 lakh. Under Section 220 (2A) of the Income Tax (IT) Act, if a taxpayer is unable to pay the tax amount determined in a demand notice, then he will have to pay interest at the rate of 1 percent per month for the period of delay in making the payment.
The Act also empowers tax officers to reduce or waive the amount of interest payable. According to the circular, the reduction or waiver of interest payable will be subject to three prescribed conditions –
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- Such amount, payment of which has caused or will cause trouble to the taxpayers.
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- The default in interest payment may have occurred due to circumstances which were beyond the control of the taxpayer.
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- The taxpayer has cooperated in the investigation relating to the assessment or in proceedings for the recovery of any amount due therefrom.
S Vasudevan, Executive Partner, Lakshmikumaran & Sridharan, said that monetary limits have been set mainly to simplify the use of powers of different authorities. Apart from this, Sachin Garg, Partner, Nangia & Co., said that this step will help in speedy settlement of applications made by taxpayers for exemption or reduction in interest. He said that it is worth noting that no changes have been made in the conditions that are required to be fulfilled for exemption or reduction in interest under section 220 of the Act.
