Circular No-05/2025
Date-28/03/2025
Subject-Order under section 119 of the Income-tax Act, 1961, to waive interest under section 201(1A)(ii) or 206C(7) in specific cases.
Taxpayers faced technical glitches while making TDS/TCS payments, resulting in delayed credits to the Central Government and interest levies. The Chief Commissioner of Income-tax (CCT), Director General of Income-tax (DGIT), or Principal Chief Commissioner of Income-tax (PCCIT) can waive interest if payments were initiated on or before the due date but delayed due to technical issues. Applications for waiver must be filed within one year from the end of the financial year and will be disposed of within six months. The order is final and cannot be appealed.
Section 201(1A) of the Income-tax Act (hereinafter “the Act”) provides for levy of interest on account of failure to deduct or pay the deducted tax to the credit of the Central Government by the deductor. Further, section 206C(7) of the Act provides for levy of interest on account of failure to collect or pay the collected tax to the credit of the Central Government by the collector.
Representations have been received by the Central Board of Direct Taxes (hereinafter “the Board”) that while making payments of taxes deducted at source (TDS) and taxes collected at source (TCS) to the credit of the Central Government as per section 200 and 206C of the Act, the taxpayers have encountered technical glitches. On account of such glitches, while the payment is initiated by the taxpayers/ deductors/ collectors and the amounts are debited from their bank accounts on or before the due date, the actual credit to the Central Government is done after the due date. In such cases, notices have been received by such taxpayers for levy of interest under section 201(1A)(ii)/ 206C(7) of the Act, as the case maybe.
In exercise of the powers under section 119 of the Act, the Board, hereby directs that the Chief Commissioner of Income-tax (CCT) or Director General of Income-tax (DGIT) (or in case there is no CCT and DGIT, then Principal Chief Commissioner of Income-tax (PCCIT)) may reduce or waive interest charged under section 201(1A)(ii) / 206C(7) of the Act in the class of cases where:
The CCT or DGIT or PCCIT, as the case maybe, examining an application for waiver of interest under this order shall pass a speaking order after providing adequate opportunity of being heard to the applicant and after verification of technical glitches from the bank/Directorate of Systems.
Even if the interest under section 201(1A)(ii)/ 206C(7) of the Act has already been paid by the taxpayer, the same can be considered for waiver and a refund maybe given to the deductor, if waiver is ordered.
No waiver application shall be entertained beyond one year from the end of the financial year for which the interest under section 201(1A)(ii)/ 206C(7) of the Act is charged.
An application received for waiver of interest under section 201(1A)(ii)/ 206C(7) of the Act shall be disposed of within a period of six months from the end of the month in which such application is received.
The order issued by the CCTIT or DGIT or PrCCIT, as the case maybe, shall be final and no petition against that order shall be entertained by the Board.
The Circular can be accessed at: https://incometaxindia.gov.in/news/circular-no-5-2025.pd
