In taxman's language, compounding of offence means that the I-T department will not file a prosecution case in the court in lieu of payment of due taxes and surcharges. (iStock)
In taxman's language, compounding of offence means that the I-T department will not file a prosecution case in the court in lieu of payment of due taxes and surcharges. (iStock)

Income tax department relaxes time for applying for compounding of offences

  • The one-time facility to apply for compounding of offences is open till December 31
  • In some cases, taxpayers could not apply for compounding of the offence as the compounding application was filed beyond 12 months

NEW DELHI : The income tax department has relaxed time for applying for compounding of income tax offences by launching of a one-time facility. The Central Board of Direct Taxes (CBDT) has issued a circular this week relaxing the 12-month time limit for compounding application, as a one-time measure.

According the guideline, the application can be made if any prosecution proceedings are pending before any court of law for more than 12 months, or if you had to withdraw the compounding application as it was filed beyond 12 months, or if the compounding application was rejected previously for technical reasons.

In taxman's language, compounding of offence means that the I-T department will not file a prosecution case in the court in lieu of payment of due taxes and surcharges. The income tax department had recently tightened the screw on tax evaders and made serious offences under black money and benami laws "generally" non-compoundable. This means that a person or entity would not be able to settle a case of tax evasion by just paying the tax demand, penalty and interest.

The new window, however, will not be available in all such cases relating to serious tax evasion, financial crime, terror financing, money laundering, possession of illegal foreign assets, benami properties or for someone who has been convicted by a court in the past.

The income tax department said the "one-time measure" is being undertaken to mitigate unintended hardship to taxpayers in deserving cases and to reduce the pendency of existing prosecution cases before the courts.

The one-time facility is open till December 31.

"Cases have been brought to the notice of CBDT where the taxpayers could not apply for compounding of the offence as the compounding application was filed beyond 12 months," the CBDT circular said.

A taxpayer or an assessee, in order to avail the facility, will have to file an application for compounding a tax offence before a Principal Chief Commissioner or Chief Commissioner, Principal Director General or Director General of Income-tax department on or before December 31, 2019.

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