Deductors / collectors may get interest waiver if TDS/TCS amount debited from the bank account but not credited to the Government Treasury due to technical glitches
As per section 201(1A)(ii) of the Income-tax Act, 1961, any person who is liable to deduct taxes does not pay the taxes deducted to the credit of the Central Government on or before the due date prescribed as per the Act, shall be liable to pay simple interest at the rate of 1.5% per month or part of the month. Similarly, section 206C(7) of the Act, prescribes interest in case of failure of payment of taxes collected to the credit of Central Government.
Often times, deductors and collectors, while making payment of such taxes deducted/ collected to the credit of Central Government, face technical glitches whereby the amount is debited from the bank account on or before the due date prescribed, however the same is not credited to the account of the Central Government.
In this regard, the CBDT has issued Circular No. 5 of 2025, dated 28 March 2025.
As per the said Circular:
(i) in case the payment is initiated and the amount is debited from the bank account of the deductor/collector on or before the due date; and
(ii) the tax is not credited to the credit of the Central Government before the due date on account of technical glitch, beyond the control of deductor/collector, then in such circumstances the interest levied on account of such technical glitch may be waived or reduced by the CCIT/DGIT/PrCCIT (in case there is no CCIT/DGIT)
Other salient aspects of this circular are:
1. In order to get the interest waived/reduced, the deductor/collector shall make an application to the aforementioned authorities.
2. The said application should be made within one year from the end of the financial year in which such interest is levied.
3. The authorities shall pass a speaking order after examining the application and verifying the technical glitches from the bank and the Directorate of Systems and providing opportunity of being heard to the deductor/collector.
4. The application made shall be disposed off within a period of six months from the end of the month in which such application is received.
5. The waiver order shall be final and no petition shall be entertained by the Board against such Order.
6. Even in cases where the interest has already been paid, the same can be considered for waiver and refund may be given, if waiver is ordered.
The Copy Of the Circular is as under:
