💡 Income Tax Interest Waivers & Relaxations for AY 2025–26

Complete Guide to Latest CBDT Circulars | Professional Duniya

📅 Introduction

The Assessment Year (AY) 2025–26, covering Financial Year (FY) 2024–25, brings significant relief measures for taxpayers. The Central Board of Direct Taxes (CBDT) has issued multiple circulars granting interest waivers and compliance relaxations under specific circumstances. Whether you’re a business owner, professional, or individual taxpayer, understanding these updates can help you save money and avoid penalties.

1️⃣ Waiver on Late Payment of Tax Demand – Section 220(2)

Circular No. 13/2025 (Issued: September 19, 2025)
This waiver applies when a tax demand arises due to a rectification order from the Centralised Processing Centre (CPC).

✅ Key Conditions:

• Pay the demand on or before December 31, 2025 to avoid interest under Section 220(2)

• Payments made after this date will attract interest from the original due date

💡 Tip from Professional Duniya:
If you’ve received a rectification order, act quickly — paying before the deadline can save you substantial interest costs.
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2️⃣ Waiver on Delayed TDS/TCS Payments – Sections 201(1A)(ii) & 206C(7)

Circulars No. 5/2025 & 8/2025
Taxpayers who delay depositing TDS or TCS due to genuine reasons can apply for a waiver or reduction of interest.

✅ Eligibility:

• Must have a reasonable cause for the delay

• Apply for waiver within one year from the end of the FY in which interest was charged

💡 Tip:
Document your reasons for delay and file your waiver application promptly to improve approval chances.
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3️⃣ Interest on Late Filing of ITR – Section 234A

The due date for filing ITR for non-audit cases for FY 2024–25 was extended to September 16, 2025.

✅ Relief:

• Filing ITR and paying self-assessment tax by September 16, 2025 means no interest under Section 234A

• Filing after this date attracts 1% interest per month on outstanding tax

💡 Tip:
Even with extensions, aim to file early — it reduces stress and avoids last-minute errors.
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4️⃣ Penal Interest on Advance Tax Deficiencies – Sections 234B & 234C

The ITR deadline extension does not impact penal interest for advance tax shortfalls.

❗ Important:

• Interest under Sections 234B and 234C applies for shortfalls in advance tax payments during FY 2024–25

• Plan quarterly advance tax payments carefully to avoid these penalties

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📌 Professional Duniya’s Compliance Checklist for AY 2025–26

• ✅ Pay rectified tax demands by Dec 31, 2025

• ✅ Apply for TDS/TCS interest waiver within one year

• ✅ File ITR and pay self-assessment tax by Sep 16, 2025

• ⚠️ Ensure advance tax payments are made on time

🏁 Conclusion

The CBDT’s latest circulars provide welcome relief, but deadlines are critical. Missing them can lead to avoidable interest charges. At Professional Duniya, we help you stay ahead with timely updates, compliance strategies, and expert tax advisory services.

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