CBDT issues revised guidelines for compounding of offences under the Income-tax Act
On 17 October 2024, in India, the Central Board of Direct Taxes issued revised guidelines for compounding of offences under the Income-tax Act, 1961, simplifying the procedure and lowering compounding charges.
Summary
On 17 October 2024, in India, the Central Board of Direct Taxes (CBDT) issued Revised Guidelines for Compounding of offences under the Income-tax Act, 1961, in line with the Finance Minister's budget announcement. The guidelines supersede all earlier guidelines and apply to pending and new applications. They eliminate the categorisation of offences, remove the limit on the number of applications, and allow a fresh application after curing defects. Compounding charges have been rationalised: interest on delayed payment of compounding charges is abolished, and for TDS defaults the multiple rates of 2%, 3% and 5% are replaced by a single rate of 1.5% per month.
Key facts
- Issued
- 17 Oct 2024
- By
- CBDT
- Law
- Income-tax Act, 1961
- Scope
- Supersede all earlier guidelines; pending and new applications
- Simplified
- No categorisation of offences; no limit on number of applications
- TDS default rate
- Single 1.5% per month (was 2%, 3%, 5%)
- Interest
- Abolished on delayed compounding charges
Practice MCQs 2 questions
Under CBDT's revised compounding guidelines of 17 October 2024, the multiple rates of compounding charges for TDS defaults were replaced by a single rate of:
Show answer
Correct answer: D — 1.5% per month
PIB, 17 Oct 2024: for TDS defaults, multiple rates of 2%, 3% and 5% have been reduced to single rate of 1.5% per month.
Consider the following statements about CBDT's revised compounding guidelines issued on 17 October 2024: 1. They apply only to new applications filed after the date of issue. 2. Interest chargeable on delayed payment of compounding charges has been abolished. Which of the statements given above is/are correct?
Show answer
Correct answer: B — 2 only
Statement 1 is wrong: PIB says the guidelines apply to pending as well as new applications. Statement 2 is correct: interest chargeable on delayed payment of compounding charges has been abolished.