Clarification on waiver of levy of interest under section 201(1A) (ii)/206C (7) of the Income Tax Act,1961

CBDT issued Circular (i.e. No. 05/2025, dated 28^th March 2025) on waiver of interest, whereas interest is levied under section 201(1A) (ii) and 206(7) on delay deposition of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) respectively in the case, payment of TDS/TCS were initiated and were debited on or before the due date from the bank accounts of the deductor/collector, but the same was not credited to the account of the Central Government before the due date, due to technical glitches.

In this regard, for further clarifications, CBDT issued Circular No. 8/2025 dated 01 July 2025 providing following clarifications:

• The Chief Commissioner of Income-tax (CCIT) or Director General of Income-tax (DGIT) or Principal Chief Commissioner of Income- tax (Pr. CCIT) is empowered to pass order for waiver after the date of issue of the Circular (i.e. No. 05/2025, dated 28^th March 2025).
• Application for waiver of interest can be entertained within the timeline of one year from the end of the financial year for which the interest under section 201(1A) (ii)/ 206(7) is charged. For instance, if the interest charged pertains to FY 2023-24, the application for waiver of such interest can be filed by 31.03.2025 i.e. one year of FY 2023-24.

Further, it is also clarified that such waiver applications can be entertained for interest under section 201(1A)(ii)/206C(7) even before the issuance of the Circular (i.e. No. 05/2025, dated 28^th March 2025) subject to above timeline.