CBDT sets monetary limit to waive interest

The central board of direct taxes (CBDT) has set monetary limitations for waiver or Reduction of Interest on Tax Payments with riders.

According to the circular issued late night Monday, principal chief commissioners of Income Tax can waive up to Rs. 50 lakhs, chief commissioners or director generals of Income Tax can waive between Rs. 50 lakhs and Rs. 1.5 crores, and principal chief commissioners of Income Tax can waive interest above Rs. 1.5 crores.

The notification will be effective Tuesday.


The interest waiver or reduction will be considered if payment of the amount would cause genuine hardship to the taxpayer, or if default was due to circumstances beyond their control, the circular said.

Taxpayers must also co-operate in assessment or recovery proceedings, the circular added.

While there was provision to waive interest in the reducing or waiving interest payable under Section 220(2) of the Income-tax Act, there was no monetary limit for the waiver.

Experts say the move aims to streamline the process and provide relief to taxpayers facing genuine hardships.

"The circular simplifies the waiver process for compliant taxpayers, while safeguards help minimize misuse," Rajat Mohan, senior Partner, AMRG and Associates said.

"Although a surge in waiver requests may initially impact tax collections during the transition period, the overall effect on revenue is expected to be minimal, reinforcing the circular’s balance between taxpayer support and fiscal responsibility," he added.