Now, I-T officers can waive, reduce your interest dues

The Income Tax Department has allowed tax officials to either waive or reduce interest payable by a taxpayer, subject to specified conditions.

Under Section 220 (2A) of the Income Tax Act, if a taxpayer fails to pay the tax amount specified in any demand notice, he/she is liable to pay interest at 1 per cent per month for the period of delay in making the payment.

The Act also empowers the department’s Principal Chief Commissioner (PrCCIT) or Chief Commissioner (CCIT) or Principal Commissioner (PrCIT) or Commissioner-rank officers to reduce or waive the amount interest due to be paid.

The Central Board of Direct Taxes (CBDT) through a circular dated November 4 has specified the monetary threshold of the interest that can be waived or reduced by the tax officers.

Accordingly, a PrCCIT-rank officer can decide on reducing or waiving due interest of over Rs 1.5 crore. For interest due above Rs 50 lakh to Rs 1.5 crore, CCIT rank officer will decide on the waiver/reduction, while PrCIT or Income Tax Commissioners can decide on interest due up to Rs 50 lakh.

The power of reduction or waiver of the interest payable under Section 220 (2A) would be subject to satisfaction of three specified conditions — payment of such amount has caused or would cause genuine hardship to the assessee; default in interest payment was due to circumstances beyond the control of the assessee; the assessee has cooperated in inquiry relating to assessment or proceeding of the recovery of any amount due from him.

Nangia & Co LLP Partner Sachin Garg said: “The CBDT’s move is expected to facilitate expeditious disposal of applications by a taxpayer for waiver or reduction of interest under Section 220.”