CBDT makes all Income Tax offences compoundable, eases rules for defaulters

All offences under the income-tax law, including cases that involve agencies such as the Enforcement Directorate and the Central Bureau of Investigation, have been made compoundable by competent tax authorities if the applicant is not found to be involved in any anti-national or terrorist activity, the central board of direct taxes (CBDT) said on Monday.

However, if the applicant is found involved in such activities, the offence shall be compounded only with the approval of the CBDT chairman.

As a measure to help taxpayers who want to apply for the compounding of offences, the CBDT issued a detailed frequently asked questions (FAQ) on Monday.


Compounding of an offence is a mechanism whereby the defaulter is reprieved of major legal consequences by allowing him or her an opportunity to pay a certain sum of money to escape prosecution.

According to the FAQ, taxpayers can apply multiple times for the compounding of offences as the Centre allows fresh applications upon curing of defects, and removes the existing time limit for filing applications, which was previously set at 36 months from the date of filing of the complaint.

The compounding application may be filed even after launch of the prosecution.