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A significant tax relief has been announced by the Central Board of Direct Taxes (CBDT). For qualified cases, CBDT waives the interest levy under Sections 201(1A) (ii) and 206C(7) of the Income-tax Act through its 2025 circular no. 08/2025.
The goal of this action is to lessen the financial burden of taxpayers who had to pay interest on TDS/TCS payments that were delayed for valid reasons. This relief is a much-needed reprieve for a lot of people and businesses.
However, what is the true meaning of this waiver? And who stands to gain from it? Let's dissect it.
Interest on late or non-payment of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) is covered by Sections 201(1A) (ii) and 206C (7) of the Income-tax Act.
In the past, taxpayers were still required to pay interest even if the delay was caused by technical difficulties or banking problems.
The CBDT declared in 2025 that in worthy cases, such interest may now be waived. Following comments from taxpayers and industry experts, this decision is described in detail in Circular No. 08/2025.
The government's goal to facilitate compliance and assist legitimate taxpayers is reflected in the waiver.
Numerous companies, particularly start-ups and MSMEs, stated that the following factors frequently caused TDS/TCS deposit delays:
The CBDT recognizes these practical difficulties and guarantees that no taxpayer is unjustly punished by permitting a waiver.
Not everybody is eligible. The recipients of this relief are taxpayers who actually experienced hardship.
| Eligible cases include: |
| 1. Payments made in advance of the due date but credited later because of system problems are examples of eligible cases. |
| 2. Unintended delays that are out of the taxpayer's control. |
| 3. situations in which taxes were paid but interest was assessed. |
| Ineligible cases: |
| 1. Intentional non-payment or wilful defaults. |
| 2. Persistent late filers without good cause. |
Applications must be sent to the appropriate authorities, such as the Director General of Income Tax (DGIT), the Principal Chief Commissioner of Income Tax (Pr. CCIT), or the Chief Commissioner of Income Tax (CCIT).
A stringent deadline has been set by the CBDT.
Within a year of the fiscal year in which the interest was assessed, taxpayers must submit an application.
The application needs to be filed by March 31, 2025, if interest was assessed in FY 2023–2024.
Since this deadline cannot be negotiated, prompt action is essential.
Every rupee matters for new and start-up companies. Even minor fines are a major hardship due to tight budgets, scarce financial resources, and ongoing pressure to fulfil compliance requirements. This is particularly true for MSMEs, who sometimes lack specialized compliance teams and find it difficult to stay on top of constantly evolving tax laws.
The respite is especially helpful for STPI-registered corporations and IT firms that specialize in exports, as international banking procedures and transactions can occasionally result in unanticipated delays in TDS/TCS payments. These companies, who are already dealing with a number of operational difficulties, now have a safeguard against unjust interest charges brought on by uncontrollable circumstances.
We at Book My Accountant (BMA) collaborate closely with IT companies, MSMEs, and start-ups to assist them understand and comply with complicated tax laws. More than merely monetary comfort, this waiver gives these companies the chance to refocus their efforts on expansion and innovation rather than worrying about fines for inevitable delays.
Here is a basic guide:
You now have the opportunity to get relief if you have paid interest or been charged interest as a result of actual banking or system errors.
For businesses, this means:
Book My Accountant (BMA) has witnessed personally how quickly important deadlines can pass when tax compliance isn't given first priority. Therefore, if you think you are eligible for this waiver, we strongly advise you to take immediate action. Early application submission lowers last-minute stress and improves your chances of approval. Seeking professional aid is equally vital because applications that are accompanied by well-organized documentation have a much higher chance of being accepted. In order to ensure future operations, go more smoothly, now is also a great time to assess and enhance your TDS/TCS compliance procedure.
Sections 201(1A) (ii) and 206C (7) of the CBDT provide a 2025 interest waiver, which is a welcome relief for upfront taxpayers, particularly exporters, MSMEs, and start-ups that are facing inevitable delays. It shows that the government wants to make compliance more equitable and useful. But because the relief is application-based and subject to stringent deadlines, prompt action is crucial.
To increase their chances of receiving this benefit, Book My Accountant (BMA) assists individuals and companies in creating strong applications with the required supporting documents. Now is the time to take action and lessen needless financial burden if you think you qualify.
Disclaimer:
This article has been prepared by Book My Accountant (BMA) for general awareness purposes. It is based on publicly available information and CBDT circulars. It should not be treated as legal or financial advice. For personalized consultation, please connect with a qualified tax expert.
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