I-T department guidelines for interest waiver in specific cases offer tax relief

New Delhi: In a relief for taxpayers, the income-tax department on Friday issued guidelines specifying cases where interest levied on them could be waived.

Senior officials of the department can now waive or reduce interest in cases where the assessee genuinely believed that no tax needed to be withheld.

For instance, in cases where the taxpayer did not deduct tax based on a high court ruling that was subsequently overturned by the Supreme Court or through a retrospective amendment, the taxpayer will be eligible to seek relief.

“It is a positive decision and will help taxpayers who genuinely believed they were not required to withhold tax under the current regulations,” said Amit Maheshwari, partner at accounting firm Ashok Maheshwary and Associates LLP.

Taxpayers can also seek relief where default is on account of a payment to a non-resident residing in a country with which India has a double taxation avoidance agreement.

But this is subject to the taxpayer approaching the competent Indian authority within two years of receiving notice of demand and settling it under the mutual agreement procedure.

Further, interest can also be waived if the tax deductible could not be calculated because the books of accounts and other documents necessary for making tax deduction were seized in search-seizure proceedings.

These guidelines were issued under section 201 (1A) of the Income-tax Act which provides for levy of interest at the rate of 1% per month for delay in deduction of tax.

However, no appeals or review of the orders of the chief commissioner or director general of income tax will be entertained by the tax authorities.