CBDT Simplifies Compounding Procedures with Overhauled Guidelines

The Central Board of Direct Taxes (CBDT) has introduced revised guidelines for compounding offences under the Income-tax Act, aiming to simplify procedures and reduce charges. The updates include eliminating offence categories and time limits, rationalizing charges, and allowing broader application scenarios, promoting ease of compliance for stakeholders.

The Central Board of Direct Taxes (CBDT) rolled out fresh guidelines on compounding of offences under the Income-tax Act, 1961, on Thursday. In line with the Finance Minister's budget proposal to simplify financial regulations, these policies are expected to streamline application processes and lower associated costs.

By consolidating previously disparate guidelines, CBDT aims to reduce bureaucratic hurdles for stakeholders. Key simplifications include eliminating offence categories, scrapping limits on application submissions, and introducing the possibility to file fresh applications after addressing previous defects. The revised guidelines also now allow compounding for offences under specific sections of the Act without the previous time constraints.

Significantly, the requirement for the principal accused to file applications has been removed, allowing more flexible options for stakeholders. Compounding charges have been rationalized, with interest on delayed payments abolished and reduced rates introduced for various offences. These measures are intended to make compliance more manageable and affordable for entities affected by these changes.

(With inputs from agencies.)