Time limit prescribed for petition seeking waiver of interest under section 220
Presently, when the notice of demand under section 156 is issued specifying the tax payable, it is to be paid within 30 days. For the failure, the taxpayer is liable to pay interest at 1% per month for the delay in discharge of demand. Section 220(2A) empowers the Principal Commissioner or Chief Commissioner to reduce or waive the amount of interest subject to satisfaction of certain conditions.
Presently, there is no time limit for disposal of the petition of the taxpayers seeking waiver of interest under section 220(2).
The Finance Bill, 2016 proposes that the order accepting or rejecting the application of the taxpayer must be passed within 12 months from the end of the month in which the application was received. Further it mandates that in case of rejection of such application, no such order shall be passed unless the taxpayer is given an opportunity of being heard.
The applications which are pending as 01.06.2016 are to be given disposal before 31.05.2017 and in respect of the application filed thereafter, the time limit given above would apply. This amendment becomes operative from 01.06.2016.
The amendment proposed would provide certainty to the taxpayers and creates proper balance between the taxgatherers and the taxpayers. It is fair that an opportunity is given before the application of the taxpayer is rejected by thetax authority.