CBDT Waives Interest on Late TDS/TCS Payments due to Technical Glitch [Read Circular]
Section 14(2) stipulates that the supply of essential goods or services to the Corporate Debtor shall not be terminated, suspended, or interrupted during the CIRP period
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Due to a technical issue, the Central Board of Direct Taxes (CBDT) through Circular No. 05/2025, dated 28/03/2025 has announced that interest on late payments of tax collected at source (TCS) or tax deducted at source (TDS) will not be charged. Read More: Unexplained Cash Deposits: ITAT Reduces ₹72 Lakh Addition to ₹2 Lakh on Verifying Home Loan Credits and ITRs Under section 119...
Due to a technical issue, the Central Board of Direct Taxes (CBDT) through Circular No. 05/2025, dated 28/03/2025 has announced that interest on late payments of tax collected at source (TCS) or tax deducted at source (TDS) will not be charged.
Under section 119 of the Income-tax Act, 1961, the board has issued an order waiving the levy of interest under sections 201(IA)(ii) and 206C(7) of the Income Tax Act, as applicable in certain circumstances. Section 20 I(I A) of the Income-tax Act (henceforth referred to as "the Act") stipulates that interest may be assessed if the deductor fails to deduct or pay the tax to the Central Government's credit. Additionally, the Act's section 206C(7) allows for the collection of interest if the collector fails to collect or pay the collected tax to the Central Government's credit.
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The Board has been informed that taxpayers have experienced technical difficulties when attempting to pay taxes deducted at source (TDS) and taxes collected at source (TCS) to the Central Government's credit in accordance with sections 200 and 206C of the Income Tax Act.
Due to errors, the real credit to the Central Government is completed after the due date, even though the taxpayers, deductors, and collectors initiated the payment and the funds were taken out of their bank accounts on or before the due date. These taxpayers have received notices for interest levy under section 20 I(1 A)(ii) or 206C(7) of the Act, as applicable.
In exercise of the powers under section 119 of the Act, the Board, directed that the Chief Commissioner of Income-tax (CCIT) or Director General of Income-tax (DGIT) or in case there is no CCIT and DGIT, then Principal Chief Commissioner of Income-tax (PrCCIT) may reduce or waive interest charged under section 201(lA)(ii) / 206C(7) of the Act in the class of cases.
The payment is initiated by the taxpayers/ deductors collectors and the amounts are debited from their bank accounts on or before the due date, and the tax could not be credited to the Central Government, before the due date because of technical problems, beyond the control of the taxpayer/deductor/collector.
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Even if the interest under section 201(lA)(ii)/ 206C(7) of the Act has already been paid by the taxpayer, the same can be considered for waiver and a refund maybe given to the deductor, if waiver is ordered. The Board clarified that no waiver application shall be entertained beyond one year from the end of the financial year for which the interest under section 201(IA)(ii)/ 206C(7) of the Act is charged.
To Read the full text of the Circular CLICK HERE
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