The Central Board of Direct Taxes (CBDT) has issued Circular No. 8/2025 dated July 1, 2025, to clarify key concerns raised by field officers regarding the waiver of interest under Sections 201(1A)(ii) and 206C(7) of the Income-tax Act, 1961, as initially addressed in its earlier Circular No. 5/2025 dated March 28, 2025.
The clarification responds to queries on whether the authority to grant waivers is effective retrospectively or only from the date of the circular's issuance. The CBDT has now confirmed that the prescribed authority-namely, Chief Commissioners of Income Tax (CCIT), Director Generals of Income Tax (DGIT), or Principal Chief Commissioners (Pr.CCIT)-is empowered to process waiver applications after the issuance of Circular No. 5/2025.
Additionally, the CBDT has clarified the timeline for submitting waiver applications:
Applications must be filed within one year from the end of the financial year in which the interest was charged.
For example, if the interest relates to FY 2023-24, the deadline for filing a waiver application is March 31, 2025.
Most notably, the circular also allows for waiver applications concerning interest charged before March 28, 2025, the date of the earlier circular, provided they adhere to the one-year submission window mentioned above.
This move is expected to offer relief to several taxpayers and deductors who may have defaulted in TDS or TCS payments and are facing interest liabilities. The relaxation aims to streamline processes and ease the compliance burden for eligible applicants.
The clarification has been widely welcomed by tax professionals, chartered accountants, and business chambers, as it addresses key interpretational gaps and ensures consistent application across tax jurisdictions.
Official copy of the notification has been attached
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