CBDT revised guidelines 2024 for compounding of offences under Income-Tax Act 1961

CBDT issues revised guidelines 2024 for compounding of offences under Income-Tax Act 1961

In conformity with the  Finance Minister’s budget announcement on simplification and rationalization of compounding procedure, CBDT has issued Revised Guidelines for Compounding of offences under the Income-tax Act, 1961(the ‘Act’) on 17.10.2024.

Section 279(2) of the Act provides that any offence under chapter XXII of the Act may, either before or after the institution of proceedings, be compounded by the PCCIT/CCIT/PDGIT. 

Earlier. CBDT had issued Compounding guidelines four times, dated 16.05.2008, dated 23.12.2014. dated 14.06.2019. and dated 16.09.2022

The guidelines have been simplified inter-alia by eliminating the categorization of offences, removing the limit on number of occasions for filing applications, allowing fresh application upon curing of defects which was not permissible under earlier guidelines, allowing compounding of offences under section 275A and 276B of the Act, removing the existing time limit for filing application viz 36 months from the date of filing of complaint, etc.

To facilitate compounding of offences by companies and HUFs, the requirement of main accused filing the application has been dispensed with. The offences of the main accused as well as any or all co- accused can be compounded on payment of relevant compounding charges by the main accused and/or any of the co-accused, under the revised guidelines.

The Scope
The compounding charges have also been rationalized by abolishing interest chargeable on delayed payment of compounding charges, reducing rates for various offences such as for TDS defaults, multiple rates of 2%, 3% and 5% have been reduced to single rate of 1.5% per month and basis for calculation of compounding charges for non-filing of return has been simplified. Other simplification measures include removal of charge of separate compounding fee from co- accused.

The 2024 Guidelines shall come into effect from 17.10.2024 and shall apply mutatis mutandis to all  applications which are either filed after the date of issuance of these guidelines or were already filed earlier but had not been disposed. For applications, pending on the date of issuance of these Guidelines, if compounding charges have already been determined and intimated but not fully paid, the compounding charges shall be re-determined , provided they are lower as per these Guidelines. However, no refund or adjustment against other dues shall be made if the higher compounding charges, determined as per the previous Guidelines, have already been paid.

Applications may also be filed again,  in  case  applications  under  earlier  guidelines were rejected only on account of curable defects such as non-payment of outstanding tax, interest, penalty , or any other sum related to the offence, filing of application in incorrect proforma , mention of incorrect assessment year/financial  year  or  section under which offence has been committed, non-payment or short payment of compounding charges,  non-submission  of  undertaking  regarding  withdrawal  of appeals, etc. Credit for the payment already made shall be given against the compounding charges to be paid under these Guidelines. Further, it is clarified lhat those applications rejected in the past on merits by the Competent Authority shall not be reconsidered, under this provision.

Compounding Fee

For Compounding Applications for the Consolidated Compounding filed on or after the date of issuance of these guidelines. irrespective of the year of offence, the applicant shall deposit non-refundable Compounding Application Fee as following:

• Single Compounding application- Rs. 25,000/- (per application).
• Consolidated Compounding application- Rs. 50,000/- (per application).

Compounding Application shall be made in the format of an affidavit as prescribed in the Guidelines and a with suggested checklist has been also prescribed for the concerned AO/ADIT/DDIT which is to be submitted for competent authority for approval. Compounding order shall be in the prescribed format along with statement of facts.

Download CBDT Compounding Guidelines 2024 Click Here >>

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