Tax officials can now reduce or waive the interest on taxes under specific circumstances.
This decision comes after a recent circular issued by the Central Board of Direct Taxes (CBDT).
This decision will offer relief to those who struggled to meet their tax liability despite receiving a demand notice and are now facing difficulty paying the large interest amount.
What is the new order of CBDT?
On November 4, the CBDT released a circular granting officials the authority to reduce or waive tax interest.
This relief will be provided in special cases where taxpayers face difficulties in paying the interest.
Under section 220(2A) of the Income Tax Act, tax officials are now authorized to waive or reduce interest under specific conditions.
This right allows officials to implement the process of interest reduction or waiver in certain cases.
The CBDT order specifies the limits for waiving interest as follows:
- Officers at the Principal Chief Commissioner rank can waive interest amounts exceeding Rs 1.5 crore.
- Officers at the Chief Commissioner rank can waive interest ranging from Rs 50 lakh to Rs 1.5 crore.
- Officers at the Principal Commissioner or Commissioner rank can waive interest up to Rs 50 lakh.
This exemption will apply particularly in cases where taxpayers made an honest effort to pay their tax but were unable to do so on time due to certain reasons.
Under what conditions can interest be waived?
The circular outlines specific conditions under which interest can be waived or reduced:
- If the taxpayer is experiencing financial hardship and unable to pay the interest.
- If the failure to pay interest is due to external factors like natural disasters, severe illness, or other unexpected events.
- If the taxpayer has fully cooperated with the authorities, including assisting in investigations and paying dues.
What is its importance?
This decision is significant for taxpayers as it provides relief from paying large amounts of interest.
Often, taxes are not paid on time, which leads to a growing interest amount, causing difficulty for the taxpayer.
With this decision, taxpayers will have more time, and if they are unable to pay due to valid reasons, they can get relief from the interest.
This brings new hope for taxpayers, especially those who couldn’t pay their full tax amount on time due to financial difficulties or other reasons.
