CBDT Circular No. 5/2025, issued on 28th March 2025, provides relief to taxpayers by allowing a waiver of interest levied under Sections 201(1A)(ii) and 206C(7) of the Income-tax Act, 1961 for delayed credit of TDS/TCS caused by technical glitches.
The waiver applies only if the tax payment was initiated before the due date but credited late due to factors beyond the taxpayer’s control. Taxpayers can apply for the waiver to the Chief Commissioner of Income Tax (CCIT), Director General of Income Tax (DGIT), or Principal Chief Commissioner of Income Tax (PrCCIT) within one year from the end of the financial year in which interest was levied, and a decision must be made within six months.
If already paid, the interest may be refunded upon approval. The order issued will be final, and no appeals will be entertained by CBDT. The circular is available on www.incometaxindia.gov.in and has been circulated to CBDT officials, ICAI, and Chambers of Commerce.
| Category | Details |
|---|---|
| Issuing Authority | Central Board of Direct Taxes (CBDT), Ministry of Finance, Department of Revenue |
| Circular Number | 5/2025 |
| Reference Number | F. No. 275/92/2024-IT(Budget) |
| Date of Issue | 28th March 2025 |
| Legal Basis | Section 201(1A)(ii) and 206C(7) of the Income-tax Act, 1961 |
| Purpose | Waiver of interest levied for delayed credit of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) due to technical glitches. |
| Eligible Cases | – Payment initiated before the due date, but credited late due to technical problems beyond the taxpayer’s control. |
| Authorities Empowered for Waiver | – Chief Commissioner of Income Tax (CCIT) – Director General of Income Tax (DGIT) – Principal Chief Commissioner of Income Tax (PrCCIT) (where CCIT/DGIT is unavailable) |
| Application Process | – Application to be submitted to the respective CCIT/DGIT/PrCCIT. – Opportunity of hearing provided. – Verification of technical glitches from the bank/Directorate of Systems required. – Speaking order to be issued upon decision. |
| Refund Provision | – If interest has already been paid, a refund can be provided upon waiver approval. |
| Application Deadline | Within 1 year from the end of the financial year in which interest was levied. |
| Decision Timeline | Within 6 months from the month of application submission. |
| Finality of Order | – Orders by CCIT/DGIT/PrCCIT are final. – No appeal or petition against these orders can be filed before CBDT. |
| Effective Date | 28th March 2025 (Date of Issue) |
| Implementation | – Instructions sent to CBDT officials, Income Tax officers, ICAI, and Chambers of Commerce. – To be uploaded on www.incometaxindia.gov.in and www.irsofficersonline.gov.in. |
| Section 201(1A)(ii) (Income-tax Act, 1961) | Corresponding Section-398 (Income-tax Act, 2025) |
| Section 206C(7) (Income-tax Act, 1961) | Corresponding Section-394, Section-395(3 & 4), Section-397(3), Section-398 (Income-tax Act, 2025) |
Interest Waiver on TDS/TCS Delays Due to Technical Glitches
AUBSP brings you an in-depth analysis of CBDT Circular No. 5/2025, issued on 28th March 2025, concerning the waiver of interest on delayed credit of TDS/TCS due to technical issues. This circular is a significant relief for taxpayers who have faced penalties for late credit of taxes, even though they had initiated payments on time.
Background & Justification
As per the Income-tax Act, 1961, both Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) must be deposited with the Central Government within stipulated timelines. If these taxes are not deposited on time, interest is levied under Section 201(1A)(ii) and Section 206C(7). However, taxpayers reported that due to technical glitches, payments were initiated before the deadline, but the credit to the government occurred after the due date.
As a result, taxpayers received notices for interest charges, prompting CBDT to issue this waiver directive.
Who Can Benefit from the Waiver?
AUBSP explains that taxpayers can apply for a waiver if they meet the following conditions:
- The payment was initiated before the due date, but
- Due to technical problems beyond their control, the tax was credited late to the Central Government.
This means that if a taxpayer transferred the tax on time but faced processing delays, they are eligible to apply for interest relief under this circular.
Application Process for Waiver
The CBDT has empowered the following officials to grant waivers:
- Chief Commissioner of Income Tax (CCIT)
- Director General of Income Tax (DGIT)
- Principal Chief Commissioner of Income Tax (PrCCIT) (if CCIT/DGIT is not available)
To apply for a waiver:
- The taxpayer must submit an application to the respective authority.
- The authority will verify the technical issues with the bank or Directorate of Systems.
- The taxpayer will be given an opportunity to be heard.
- A speaking order will be issued with the final decision.
Time Limit for Filing and Decision Process
| Step | Timeframe |
|---|---|
| Filing of waiver application | Within 1 year from the end of the financial year in which the interest was levied |
| Decision on application | Within 6 months from the month of application receipt |
Refund of Already Paid Interest
If a taxpayer has already paid the interest, they can still apply for a waiver and get a refund if the waiver is granted.
Finality of the Order
One crucial aspect highlighted by AUBSP is that once a waiver order is issued, it is final and binding. No petitions or appeals will be entertained by CBDT against such orders.
You may prefer to download official circular at https://incometaxindia.gov.in/communications/circular/circular-no-5-2025.pdf
FAQs on CBDT Circular No. 5/2025 – Interest Waiver on TDS/TCS Delays
1. What is CBDT Circular No. 5/2025 about?
CBDT Circular No. 5/2025, issued on 28th March 2025, provides a waiver of interest levied under Sections 201(1A)(ii) and 206C(7) of the Income-tax Act, 1961 for delayed credit of TDS/TCS due to technical glitches beyond the taxpayer’s control.
2. What sections of the Income-tax Act, 1961, does this circular cover?
The circular applies to:
- Section 201(1A)(ii) – Interest levied for failure to deduct or deposit TDS on time.
- Section 206C(7) – Interest levied for failure to collect or deposit TCS on time.
3. Who is eligible for the interest waiver?
Taxpayers are eligible if:
- The payment was initiated before the due date, and
- Due to technical glitches, the amount was credited late to the Central Government’s account.
4. What are considered “technical glitches” under this circular?
Technical glitches refer to system errors, banking delays, payment processing failures, or any other technical issues beyond the taxpayer’s control that caused a delay in crediting TDS/TCS despite timely initiation.
5. Which authorities can approve the waiver?
The waiver can be granted by:
- Chief Commissioner of Income Tax (CCIT)
- Director General of Income Tax (DGIT)
- Principal Chief Commissioner of Income Tax (PrCCIT) (if no CCIT/DGIT is available)
6. How can taxpayers apply for an interest waiver?
Taxpayers must submit a formal application to the respective CCIT, DGIT, or PrCCIT, including:
- Proof of payment initiation before the due date.
- Evidence of technical glitches.
- Bank confirmations or Directorate of Systems reports.
7. What is the deadline for filing a waiver application?
The application must be filed within 1 year from the end of the financial year in which the interest was levied.
8. How long will it take to process the waiver request?
The CCIT, DGIT, or PrCCIT must dispose of the application within six months from the month in which it is received.
9. Can a taxpayer get a refund if interest was already paid?
Yes, if the waiver is approved, any interest amount already paid will be refunded to the taxpayer.
10. Will there be any hearing before the waiver is granted?
Yes, the concerned authority will provide an opportunity for the taxpayer to be heard before making a final decision.
11. Can a taxpayer appeal if the waiver application is rejected?
No, the order issued by CCIT, DGIT, or PrCCIT is final, and CBDT will not entertain any further appeals.
12. Where can taxpayers find the official circular?
The circular is available on:
- www.incometaxindia.gov.in
- www.irsofficersonline.gov.in
13. How is this circular beneficial for taxpayers?
This circular protects taxpayers from unfair interest penalties when the delay in crediting TDS/TCS was due to uncontrollable technical issues and not due to negligence.
14. Will this waiver apply automatically, or is an application required?
The waiver is not automatic; taxpayers must apply to the respective authority for consideration.
15. Has CBDT issued similar waivers in the past?
Yes, CBDT has issued similar relief measures in past years for technical failures affecting tax payments.
16. Will this circular apply to future TDS/TCS payment delays?
No, this circular is specific to past interest levied and applies only to cases where the delay was due to technical glitches. Future cases may be considered separately by CBDT.
17. Can businesses and individuals both apply for the waiver?
Yes, both businesses and individual taxpayers can apply, provided they meet the eligibility criteria.
18. Does this waiver cover penalties as well?
No, the waiver is only for interest levied under Sections 201(1A)(ii) and 206C(7). Penalties, if applicable, are not covered under this circular.
19. Is this waiver applicable to all types of TDS and TCS?
Yes, the waiver applies to all categories of TDS and TCS payments where the delay was caused due to technical issues.
20. Has this circular been circulated to professionals and tax officers?
Yes, the circular has been shared with:
- CBDT officials
- Income Tax Officers
- The Institute of Chartered Accountants of India (ICAI)
- Chambers of Commerce
This ensures that tax professionals and businesses are well-informed.
21. How can taxpayers stay updated on such notifications?
Taxpayers should regularly check CBDT’s official website and follow professional tax advisory sources like AUBSP for timely updates.
This comprehensive FAQ section, prepared by AUBSP, answers all possible queries related to CBDT Circular No. 5/2025 and ensures that taxpayers understand how to claim an interest waiver effectively.
AUBSP advises all affected taxpayers to carefully review their TDS/TCS payment records and apply for a waiver if eligible. This circular is a major relief for those who have unintentionally faced interest charges due to technical failures.
Leave a Reply
You must be logged in to post a comment.