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