Section 276B of the Income tax Act, 1961 provides for the prosecution of a person for defaults in payments related to Tax Deducted at Source.

The section provides that the defaulter shall be punishable with rigorous imprisonment for a term that could be anything between three months to seen years. This is in addition to fine.

However, as per section 279(2) this offence this offence can be compounded either before or after the initiation of the prosecution. The authority for such compounding is Principal Chief Commissioner/Chief Commissioner or Principal Director General/ Director General.

Fee for Compunding
As per CBDT new guidelines for compounding of offences under Chapter XXII dated 01-01-2015, the fee for compounding offences under section 276B or 276BB is 3% per month or part of a month of the amount of tax in default disclosed in the compounding application.  After compounding ofthe said offence, if the same person comes forward for compounding of such offence through any subsequent application, the applicable rate for compounding of such an offence will be 5% per month or part of a month of the amount of tax in default. The period of default for calculating compounding fee in the category shall be calculated from the date of deduction to the date of deposit of tax deducted at source as is done in respect of calculating interest under section 201(1A)

Correct Income tax Challan for payment of Compounding Fee u/s 276B/276BB
Often, there is some confusion over the selection of the type of challan (ITNS-280 or ITNS-281) to be used for the payment of the compounding fee. It should be noted that cthe ompounding fee should be deposited through TDS/TCS Challan ITNS-281 which is the correct one for this purpose.

The various fields in ITNS-281 should be filled as under:

Related Updates:

CBDT Latest Guideline dated 01-01-2015 on Compounding Click Here >>
Excel Application for Compounding Click Here >>
Excel Auto Income Tax Challan ITNS-281 with Database Click Here >>