Income Tax Department has allowed tax officials to waive or reduce the interest payable by taxpayers under prescribed conditions.
Tax Waiver Limit: Income Tax Department has allowed tax officials to waive or reduce the interest payable by taxpayers under certain 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 will have 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 officers of the rank of Principal Chief Commissioner (PRCCIT) or Chief Commissioner (CCIT) or Principal Commissioner (PRCIT) or Commissioner to reduce or waive the amount of interest payable. The Central Board of Direct Taxes (CBDT) through a circular issued on November 4 specified the monetary limit of interest that tax officers can waive or reduce.
How much tax can be waived?
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 on exemption/deduction, while a PRCIT or Income Tax Commissioner can decide on outstanding interest up to Rs 50 lakh.
At the same time, reduction or exemption in interest payable under section 220 (2A) will be available on fulfillment of three specified conditions. These conditions are, payment of such amount has caused or will cause genuine hardship to the taxpayer; default in payment of interest was due to circumstances beyond the control of the taxpayer; the taxpayer has cooperated in investigations related to tax assessment or in proceedings for recovery of any amount due from him.
Will help in speedy settlement
Nangia & Co LLP partner Sachin Garg said, “This move of 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 no changes have been made in the specified conditions required to be fulfilled to seek such reduction or exemption in interest under section 220 of the Act. ” AMRG & Associates senior partner Rajat Mohan said that this move will promote transparency and efficiency in providing interest relief.
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