The Central Board of Direct Taxes (CBDT) has issued a notification regarding the waiver of interest on the late payment of tax deducted at source (TDS) or tax collected at source (TCS) due to technical glitches. This waiver has been granted under the authority of section 119 of the Income-tax Act, 1961.
Legal Provisions for Interest Levy
Section 201(1A) of the Income-tax Act provides for the levy of interest on failure to deduct or remit TDS to the credit of the Central Government by the deductor. Similarly, section 206C(7) of the Act prescribes interest for failure to collect or remit TCS to the credit of the Central Government by the collector.
Background and Justification
The CBDT has received representations from taxpayers regarding difficulties encountered while making payments of TDS and TCS as per sections 200 and 206C of the Act. Due to technical issues, despite taxpayers initiating payments and their accounts being debited on or before the due date, the actual credit to the Central Government occurred after the deadline. Consequently, taxpayers received notices for the levy of interest under section 201(1A)(ii) or section 206C(7) of the Act.
Directive for Waiver
Exercising its powers under section 119 of the Act, the CBDT has directed that:
The Chief Commissioner of Income-tax (CCIT) or Director General of Income-tax (DGIT), or in their absence, the Principal Chief Commissioner of Income-tax (PrCCIT), may reduce or waive interest charged under section 201(1A)(ii) or section 206C(7) in cases where:
The taxpayer/deductor/collector initiated the payment and the amount was debited from their bank account on or before the due date.
The delay in crediting the tax to the Central Government was due to technical issues beyond the taxpayer's control.
Refund Eligibility
Even if the interest under section 201(1A)(ii) or section 206C(7) has already been paid, the taxpayer may apply for a waiver, and if granted, a refund of the paid interest may be processed.
Timeframe for Waiver Applications
The Board has clarified that no waiver application shall be entertained beyond one year from the end of the financial year for which the interest was charged under section 201(1A)(ii) or section 206C(7) of the Act.
Official Notification
Notification Details
Circular No.: 05/2025
Date: 28/03/2025
Issued By: Central Board of Direct Taxes (CBDT)
Subject: Waiver of Interest on Late Payments of TDS/TCS Due to Technical Glitches
This notification aims to provide relief to taxpayers facing undue interest levies due to delays caused by unavoidable technical issues. Taxpayers are encouraged to apply for the waiver within the prescribed timeframe to avail of the benefits
