Guidelines for Compounding of Offences under the Income-Tax Act, 1961

Compounding of offences: discretionary settlement permitted subject to eligibility, payment of dues, and prescribed charges and procedures.

Revised administrative framework permits discretionary compounding of offences under the Income tax Act by designated senior authorities upon meeting prescribed eligibility conditions: filing a stamped affidavit application, prior payment of outstanding tax, interest and penalty related to the offence, undertaking to pay compounding charges and withdraw related appeals, subject to specified timelines, verification by the assessing functionary, prescribed compounding fees and ancillary prosecution and litigation costs, exclusions for certain offences, and procedural safeguards including reporting to courts and ITBA processing.