CBDT sets New Monetary Limits for Waiving or Reducing Interest on Pending Dues u/s 220(2) of Income Tax [Read Notification]

The Central Board of Direct Taxes ( CBDT ) has issued Circular No. 15/2024, dated November 4, 2024, outlining updated guidelines that establish specific monetary thresholds and eligibility criteria for tax authorities to waive or reduce interest on overdue tax payments, as governed by Section 220(2) of the Income Tax Act, 1961. The notification takes effect immediately from the date of issue (4.11.2024).

Section 220(2) of the Income Tax Act outlines the consequences for failing to pay taxes on time. If a taxpayer does not settle the amount specified in a demand notice under Section 156, they are required to pay simple interest at a rate of 1% per month for each month of delay.

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This section also gives senior tax officials, like the Principal Chief Commissioner (Pr.CCIT), Chief Commissioner (CCIT), Principal Commissioner (Pr.CIT), or Commissioner (CIT), the power to reduce or waive this interest if certain conditions are met.

To further streamline this process, the CBDT has introduced specific financial limits for granting interest waivers:

S.No	Income-tax Authority	Financial Limit for Waiver Approval
1	Principal Commissioner (Pr.CIT) / Commissioner (CIT)	Upto Rs. 50 lakhs
2	Chief Commissioner (CCIT) / Director General of Income Tax (DGIT)	Above Rs. 50 lakhs to Rs. 1.5 crore
3	Principal Chief Commissioner (Pr.CCIT)	Above Rs .1.5 crore

For interest dues exceeding Rs. 50 lakhs and up to Rs. 1.5 crore, CCIT/DGIT) can approve the reduction. Cases exceeding Rs. 1.5 crore fall under the jurisdiction of the Principal Chief Commissioner (Pr.CCIT), allowing for a more centralized approval process for substantial overdue amounts.

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To qualify for a waiver or reduction in interest on overdue taxes, taxpayers must meet three conditions:

• The payment of interest must cause or be likely to cause genuine hardship for the taxpayer.
• The taxpayer must demonstrate that the delay was due to circumstances beyond their control.
• The taxpayer is required to have cooperated with tax authorities in all related inquiries or proceedings for tax recovery.

To Read the full text of the Notification CLICK HERE

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