income tax The Department has permitted the tax authorities to waive or reduce the interest payable by the taxpayer subject to specific conditions. According to Section 220 (2A) of the Income Tax Act, if a taxpayer fails to pay the amount of tax specified in a notice of demand, he will have to pay interest at the rate of one percent per month during the period of delay in make the declaration. pay . The Act also empowers officers in the rank of Principal Chief Commissioner (PRCCIT) or Chief Commissioner (CCIT) or Principal Commissioner (PRCCIT) or Commissioner to reduce or waive the amount of interest payable.
How much interest can be waived?
The Central Board of Direct Taxes (CBDT), through a circular issued on November 4, specified the monetary limit of interest that the tax authorities can waive or reduce. According to this, a ranking officer of the PRCIT may decide to reduce or waive the outstanding interest of more than Rs 1.5 million. For outstanding interest ranging between Rs 50 lakh and Rs 1.5 crore, exemption/deduction will be decided by a senior CCIT officer. While the PRCIT or the Commissioner of Income Tax can decide on outstanding interest up to Rs 50 lakh.
Three conditions must be met
At the same time, deduction or exemption from interest payable under Section 220(2A) will be available if three specific conditions are fulfilled. These conditions are that the payment of said amount has caused or will cause genuine difficulties to the taxpayer. The failure to pay interest was due to circumstances beyond the taxpayer’s control. The taxpayer has cooperated in the investigation related to the assessment of the tax or in the recovery procedure of any amount owed to him. “This move by the CBDT is expected to help in speedy disposal of applications filed by taxpayers for exemption or reduction of interest under Section 220,” said Sachin Garg, partner at Nangia & Company LLP. It may be noted that there has been no change in the specified conditions to be fulfilled for claiming such reduction or waiver of interest under Section 220 of the Act.” Rajat Mohan, Senior Partner, AMRG & Associates, said this step will promote transparency. and efficiency in granting interest relief.
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