The Central Board of Direct Taxes (CBDT) has issued revised guidelines for the compounding of offences under the Income Tax Act.
The new guidelines are the outcome of Finance Minister Nirmala Sitharaman’s announcement in the Budget where she said: “I propose to decriminalise delay for payment of TDS up to the due date of filing statement for the same. I also plan to provide a standard operating procedure for TDS defaults and simplify and rationalise the compounding guidelines for such defaults.”
According to a CBDT statement, the revised guidelines supersede all existing guidelines on the subject and would apply to pending as well as new applications, from the date of its issue.
“The guidelines are expected to facilitate the stakeholders by reducing complexities arising out of existing multiple guidelines, simplifying the compounding procedure and lowering the compounding charges,” it said.
The guidelines have been simplified inter-alia by eliminating the categorisation 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 the Act, abolishing 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 the 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 statement said.
The compounding charges have also been rationalised by abolishing interest charged on delayed payment of compounding charges, reducing rates for various offences such as for TDS defaults multiple rates of 2 per cent, 3 per cent and 5 per cent have been reduced to a single rate of 1.5 per cent per month and basis for calculation of compounding charges for non-filing of return has been simplified. Other simplification measures include the removal of the charge of a separate compounding fee from the co-accused. “The revised guidelines are an additional step towards simplification of procedures aimed at promoting ease of compliance,” the statement added.