Lucknow Press
The Income Tax Department has allowed tax authorities to waive or reduce interest payable by a taxpayer subject to specified conditions. Under Section 220 (2A) of the Income Tax Act, if a taxpayer fails to pay the tax amount specified in a demand notice, he is required to pay interest at the rate of one per cent per month for the period of delay in making the payment.
The Act also empowers the Principal Chief Commissioner (PRCCIT) or Chief Commissioner (CCIT) or Principal Commissioner (PRCIT) or Commissioner rank officers to reduce or waive the amount of interest payable.
The Central Board of Direct Taxes (CBDT) has specified the monetary limit of interest that tax officials can waive or reduce through a circular issued on November 4. According to this, an officer of the rank of PRCIT can decide to reduce or waive the outstanding interest of more than Rs 1.5 crore.
For interest dues ranging from Rs 50 lakh to Rs 1.5 crore, a CCIT rank officer will decide on exemption/deduction, while PRCIT or Commissioner of Income Tax can decide on interest dues up to Rs 50 lakh.
On the other hand, under section 220(2A), the interest payable can be reduced or waived if three specified conditions are fulfilled. These conditions are, the payment of such amount has caused or would cause genuine hardship to the taxpayer; the default in paying interest was due to circumstances beyond the control of the taxpayer; the taxpayer has cooperated in the investigation related to the tax assessment or in the proceedings for the recovery of any amount due from him.
Nangia & Co LLP Partner Sachin Garg said, “This move by the CBDT is expected to help in speedy disposal of applications made by the taxpayer for exemption or reduction in interest under section 220. It is worth noting that there is no change in the specified conditions that are required to be fulfilled for seeking such reduction or waiver of interest under section 220 of the Act.”
