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CBDT Issues Revised Guidelines on Compounding of Offences in suppression of earlier guidelines


CBDT vide an Order under section 119 dated 16.09.2022 issued revised Guidelines on Compounding of Offences under the Income-tax Act, 1961 (‘Act’) in supersession of all earlier Guidelines issued on this subject, including the last Guidelines of the Board issued vide F.No.285/08/20141T (Inv. V)/147 dated 14.06.2019 with a view to simplify and facilitate compounding of offences.

In conformity with the Government's policy of facilitating ‘Ease of Doing Business’ and decriminalisation of offences, CBDT has taken steps in this direction and issued revised Guidelines for Compounding of offences under the Income-tax Act, 1961 ('Act') dated 16.09.2022 with reference to various offences covered under the prosecution provisions of the Act.

Some of the significant changes made for the benefit of taxpayers include making offences punishable under Section 276 of the Act compoundable. Further, the scope of eligibility for compounding of cases has been relaxed whereby the case of an applicant who has been convicted with imprisonment for less than 2 years being previously non-compoundable, has now been made compoundable. The discretion available with the competent authority has also been suitably restricted.

The time limit for acceptance of compounding applications has been relaxed from the earlier limit of 24 months to 36 months now, from the date of filing of the complaint. Procedural complexities have also been reduced/simplified.

Specific upper limits have been introduced for the compounding fee covering defaults across several provisions of the Act. Additional compounding charges in the nature of penal interest @ 2% per month up to 3 months and 3% per month beyond 3 months have been reduced to 1% and 2% respectively.

Download CBDT Revised Guidelines on Compounding of Offences dated 16.09.2022 in PDF format

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