CBDT issues FAQs on Revised Guidelines for Compounding of Offences

CBDT issues FAQs relating to Revised Guidelines for Compounding of Offences under Income-Tax Act, 1961 

CBDT has issued Circular on Frequently Asked Questions (FAQs) relating to Revised Guidelines for Compounding of Offences under Income-Tax Act, 1961

The revised Guidelines for Compounding of Offences under the Income-Tax Act, 1961 ( “the guidelines”) were issued on October 17, 2024. These guidelines supersede all existing guidelines on the subject and are applicable to all pending as well as new applications from the date of their issuance.

The guidelines have been simplified compared to the previous version, inter alia, by eliminating the categorization of offences, removing the limit on the number of occasions for filing applications, allowing fresh applications upon curing of defects, permitting the compounding of offences under sections 275A and 276B of the Act, and removing the existing time limit for filing applications, which was previously set at 36 months from the date of filing of the complaint.

Following the issuance of the guidelines, queries were received from stakeholders seeking clarifications on various provisions. Based on these queries, the CBDT has issued Circular No. 04/2025, dated March 17, 2025, in the form of answers to frequently asked questions (FAQs).

These FAQs contains 51 questions and answers to provide the necessary clarifications on the scope of the guidelines, eligibility for filing applications, the mode of filing compounding applications and payment of fees, terms for compounding, compounding charges and procedures for payment, time limits, and other related aspects. Each of the answer has been corelated to the relevant paragraph of the revised guidelines.

It has been specifically answered that compounding of an offence does not constitute admission of an offence by the applicant as compounding is intended to resolve the offence(s) and it is not to be construed as an admission of such offence(s) by the applicant. Further it has been stated that a co-accused may also apply for compounding of offence separately or conjointly.

Download CBDT Circular No. 04/2025 Click Here >>

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