CBDT waives interest for late deposit of TDS/TCS due to technical glitches

CBDT waives interest for late deposit of TDS/TCS due to technical glitches where payment was debited from bank account on or before due date.

CBDT has passed order under section 119 of the Income-tax Act, 1961 for waiver on levy of interest for late deposit of TDS/TCS under charging section 201(1A)(ii)/ 206C(7) of the Act, as the case maybe, in specific cases.

Section 201(1A) of the Income-tax 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. Similarly, 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.

According to CBDT order, representations were received by the Board that while making payments of taxes deducted at source (TDS) and taxes collected at source (TCS), the taxpayers had encountered technical glitches. On account of such glitches, while the payment was initiated by the taxpayers/ deductors/ collectors and the amounts were debited from their bank accounts on or before the due date, the actual credit to the Central Government was done after the due date. In such cases, notices have been issued by the Income Tax Department to such taxpayers for levy of interest under section 201(1A)(ii)/206C(7) of the Act.

In view of the above, CBDT has issued Circular No. 05/2025 dated 28.03.2025 directing that the Chief Commissioner of Income-tax (CCIT) or Director General of Income-tax (DGIT) or in their absence, Principal Chief Commissioner of Income-tax (PrCCIT) may reduce or waive interest charged under section 201(1A)(ii)/206C(7) of the Act in the class of cases where-

(i)the payment is initiated by the taxpayers/ deductorsl collectors and the amounts are debited from their bank accounts on or before the due date, and (ii)the tax could not be credited to the Central Government, before due date because of technical problems, beyond the control of the taxpayer/ deductor / collector.

It has been stated that the CClT or DGIT or PrCClT, 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 said interest 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.

However, a timeline has been prescribed for making an application for waiver. No waiver application shall be entertained beyond one year from the end of the financial year for which the interest is charged. An application received for waiver of interest shall be disposed of within a period of six months from the end of the month in which such application is received. It has been stated that the order issued by the CCIT or DGIT or PrCCIT, as the case maybe, shall be final and no petition against that order shall be entertained by the Board.

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