Waiver of Interest PreConditions for Waiver of Interest Under Section 220(2)

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The Tax Publishers Income Tax--Waiver of Interest Pre-Conditions for Waiver of Interest Under Section 220(2) V.K. Subramani When a taxpayer has tax demand payable consequent to assessment (including penalty proceedings), a notice of demand under section 156 would be issued. This demand represents the amount of tax (including interest, fee) which must be paid within 30 days of its service. In the case of penalty also, the same timeline would apply. For any delay, the taxpayer has to pay interest @1% per month or part of the month commencing from the day immediately following the end of the said period and ending with the day on which the amount is paid. This write-up discusses the conditions to be satisfied for waiver of interest by resorting to section 220(2A) of the Act. 1.1 Section 220 The sub-section (1) says that any amount other than by way of advance tax, specified as payable in a notice of demand under section 156 shall be paid within 30 days of the service of notice at the place and to the person mentioned in the notice. The proviso to the sub-section says that the Assessing Officer may reduce the time period to less than 30 days with the previous approval of the Joint Commissioner. However, this could be done only if the Assessing Officer has any reason to believe that it will be detrimental to the revenue if the full period of 30 days is allowed. Thus, when the time period for payment is 30 days or less than 30 days, the amount has to be paid within the said period specified in the notice of demand. Sub-section (1A) says that where any notice of demand has been served upon an assessee and any appeal or other proceeding is initiated in respect thereof such demand then it shall be deemed that the demand notice so issued is valid till the disposal of the appeal. Sub-section (2) says that if the amount specified is not paid within the time specified in the notice of demand, the assessee shall be liable to pay simple interest @1% for every month or part of a month comprised in the period commencing from the day immediately following the end of the period mentioned in the notice of demand and up to the date of actual payment. Sub-section (2A) says that the Pr. Chief Commissioner or Chief Commissioner or Pr.Commissioner or Commissioner may reduce or waive the amount of interest payable by an assessee if the following conditions are satisfied: (a) Payment of such amount has caused or would cause genuine hardship to the assessee; (b) Default in the payment of the amount on which interest has been paid or payable under the said sub-section was due to the circumstances beyond the control of the assessee; and SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Waiver of Interest

Pre-Conditions for Waiver of Interest Under Section 220(2)

V.K. Subramani

When a taxpayer has tax demand payable consequent to assessment (including penalty proceedings), a notice of demand under section 156 would be issued. This demand represents the amount of tax (including interest, fee) which must be paid within 30 days of its service. In the case of penalty also, the same timeline would apply. For any delay, the taxpayer has to pay interest @1% per month or part of the month commencing from the day immediately following the end of the said period and ending with the day on which the amount is paid. This write-up discusses the conditions to be satisfied for waiver of interest by resorting to section 220(2A) of the Act.

1.1 Section 220

The sub-section (1) says that any amount other than by way of advance tax, specified as payable in a notice of demand under section 156 shall be paid within 30 days of the service of notice at the place and to the person mentioned in the notice.

The proviso to the sub-section says that the Assessing Officer may reduce the time period to less than 30 days with the previous approval of the Joint Commissioner. However, this could be done only if the Assessing Officer has any reason to believe that it will be detrimental to the revenue if the full period of 30 days is allowed. Thus, when the time period for payment is 30 days or less than 30 days, the amount has to be paid within the said period specified in the notice of demand.

Sub-section (1A) says that where any notice of demand has been served upon an assessee and any appeal or other proceeding is initiated in respect thereof such demand then it shall be deemed that the demand notice so issued is valid till the disposal of the appeal.

Sub-section (2) says that if the amount specified is not paid within the time specified in the notice of demand, the assessee shall be liable to pay simple interest @1% for every month or part of a month comprised in the period commencing from the day immediately following the end of the period mentioned in the notice of demand and up to the date of actual payment.

Sub-section (2A) says that the Pr. Chief Commissioner or Chief Commissioner or Pr.Commissioner or Commissioner may reduce or waive the amount of interest payable by an assessee if the following conditions are satisfied:

(a) Payment of such amount has caused or would cause genuine hardship to the assessee;

(b) Default in the payment of the amount on which interest has been paid or payable under the said sub-section was due to the circumstances beyond the control of the assessee; and