F .No.28S/08/20 14-IT(ln v.

V)/ 196
Gover n ment of India
M inist ry of Fin a nce
Departm ent of Revenue
(Centra l Boa rd of Direct Taxes)
******

C-Block, Dr. S.P. Mukherjee Civic Centre,

Minto Road, New Delhi-I 10002
Dated: 16.09.2022

To,
All Pr.CCsITI I Pr.DGsIT
All CCs lTI DGs lT

Madam/Sir,

Subject: G uid elines fo r Com pounding ofO fre nces und er th e In co me-Tax Act, 196 1 -
r eg.

The Guidel ines on Compounding of O ffences under the Income-tax Act, 1961
(herein after referred to as 'the Act') have been reviewed by the Board with a view to
simplify and fac ilitate compounding of offences.

2. Accordingly, in supersession of all earlier Guidelines on this subject, including

the last Guideli nes of the Board issued vide F.No.28S/08/20 141T (Inv. V)114 7 dated 141h
June, 201 9, the following Gu idelines are issued, henceforth, for compliance by all
concerned .

3. Co mpo unding P rov ision

Section 279(2) of the Act provides that any offence under Chapter XXII o f the
Act may, either, before or after the institution of proceedings, be compounded by the
Pr. CC lTI CCIT! Pr. DGITI DGlT. As per section 2( IS A) and 2(21 ) of the Act, Chief
Commissioner of Income Tax includes Principal Chi ef Commiss ioner of Income Tax
and Directo r General of Income Tax includes Principal Director General of Income
Tax. These Guidelines are issued in exercise of power conferred u/s 119 of the Act read
with explanation below sub-section (6) of section 279 of the Act.
4. Compounding is not a matter of right
Compounding of offences is not a matter of right. However, offences may be
compounded by the Competent Authority on satisfaction of the eligibility conditi ons
prescribed in these Guideli nes keeping in view factors such as conduct of the person,
the nature and magnitude of the offence in the context of the facts and circumstances
of each case.

5. Applicability of these Guidelines to prosecutions under IPC

Prosecution instituted under Indian Penal Code(,IPC), if any, cannot be
compounded. However, section 32 1 of Criminal Procedure Code, 1973 , provides for
withdrawal of such prosecution. In case the prosecution complaint fi led under the
provision s of both the Act and the IPC are based on the same facts and, the complaint
under the Act is compounded, then the process of withdrawal of the complaint under
the IPC may be initiated by the Competent Authority.

6. Classitication of Offences
The offences under Chapter-XXII of the Act are classified into two parts
(Category 'A' and Category 'B') for the limited purpose of Compounding of Offences.
The Category A offences are the ones where the offences are of technical nature caused
by an act of omission. Whereas the Category B offences are non-technical offences
attri buted to an act of commiss ion.

6. 1 Category 'A'
Offences punishable under the follow ing sections are included in Category 'A' :
S.No. Section DescriptionfHeading of section
(Prior to 01104/ 1989) - Fai lure to deduct or pay tax

(w.e.f. 01.04 .1989 and lip-to 30.05 . 1997)- Failure to pay tax
I. 276B
deducted at source under Chapter XV IJ-B

Failure to pay tax deducted at source under chapter XVIJ-B

or tax payable under section 11 5 -0 or 2"d proviso to
section 194B to the credit of the Central Government (w.e.f.
0 1.06. 1997)
II . 276BB Failure to pay the tax collected at source
111. 276CC Failure to furn ish return of income

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 IV. 276CCC Failure to furni sh rerum of income in search cases in block
assessment scheme
v. 27600 (Prior to 1.04.19 89) - Failure to comply with the provisions of
section 269SS
VI. 276E (Prior to 1.04.1989) - Failure to comply with the provisions of
section 269 T
vii. 277 False statement in verification etc. with reference to offences
under C ategory 'A'.
Vlll. 278 Abetment of fa lse rerum etc. with reference to offences under
Category 'A'.

6.2 Category'B'
Offences punishable under the following sections are included in Category 'B':
S.No. Section Descriptionl Heading of section
(w.e.r. 0 1.04.1989) - Removal, concealment, transfer or
I. 276 deliveIY of property to thwart tax recovery.
ll . 276A Failure to comply with the provision of sections 178(1) and
178(3)
III. 276AA (prior to 01 .1 0.1986)- Fai lure to comply with the provisions of
section 269 AB or section 269 I
iv. 276AB (prior to 01.04.2022) Failure to comply with the provisions of
sections 269UC, 269UE and 269UL
v. 276C(1) Willful attempt to evade tax, etc.
VI. 276C(2) Willful attempt to evade payment of taxes, etc.
vii. 2760 Failure to produce accounts and documents
V lll 277 False statement in verification etc . with reference to offences
under Category 'B'.
IX 277A Falsification of books of account or documents, etc .
x. 278 Abetment of false return, etc. w ith reference to offences under
Category'B'.

7. Eligibility Conditions for Compounding

All the following conditions should be satisfied for considering compoundi ng
of an offence:
1. An app lication is made to the Pr.CCIT1 CCIT! Pr.DGlTI OGlT having
j urisdiction over the case for compounding of the offence(s) in the prescribed
format (Annex ure-I ) in the form of an aftidavit on a stamp paper of Rs.I 00/-.

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 H. The compounding application may be fi led suo-moto at any time after the
offence(s) is committed irrespective of whether it comes to the not ice of the
Department or not. However, in a case in which prosecut ion complaint has
already been filed in a cou rt of law it should be filed not later than 12 months
from the end of month of fi ling of compla int in Court.
Further, app li cation of compounding fi led afte r the end of 12 months from the
end of the month in which prosecut ion complaint, if any, has been filed in the
court of law, but within 24 months, w ill be subject to increased compounding
charges at the rate of 1.25 times of the normal compolmding charges as
applicable to the offence.

Ht. The person has paid the outstanding tax, interest (including interest uls 220 of
the Act), penalty and any other sum due, relating to the offence for which
compoundi ng has been sought before maki ng the application.
However, if any related demand is found outstanding on verifica tion by the
Department, the same shou ld be intimated to the applicant and if such demand
including interest ul s 220 is paid within 30 days of the intimation by the
Department, the n the compou nding application would be deemed to be va lid.

IV . The person undertakes to pay the Compounding charges detennined in

accordance with these guidelines by the Pr.CC IT/CCITIPr.DGITIDG IT
concerned.
v. The person undertakes to withdraw appeals filed by him, if any, related to the
offence(s) sought to be compounded. In case such an appeal has mixed
grounds, one or more of wh ich may not be related to the offence(s) under
consideration, an undertaking shall be given for wi thdrawal of such grounds
as are related to the offence to be compounded.

VI. Any application for compounding of offence uls 2768/27688 of the Act by
an applicant for any period for a particular TAN should cover all defaults
constituti ng offence u/s276 8 /27688 in respect of lhat TAN for such period.

8. Offences not to be compounded

a) Section 275A - (Colllra velltioll of ortler made ullder sub-section (3) of
sectioll 132);
b) Section 2758- ( Failure to comply witlr tir e prOl,isiolls of elause (iib) ofsub-
sectioll (I) of sectioll 132)

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8.\ Offences normally not to be compounded:

1. Offences under Category 'A' : on more than three occasions. However,

in exceptional circumstances compounding requested in more than three
occasions can be considered only on the approval of the Pro CelT of the
Region concerned. An 'occas ion' is as defined in Para 8.2.

11. Offences under Category 'B': other than the first offence(s) as defined in
Para 8.2 for the purpose of these Guidelines.

111. Any Offence under Direct Taxes Laws fo r whi ch he was convicted
earlier with imprisonment for two years or more. w ith or without fine by
a court of law.

IV. Offences committed by a person who, was convicted by a court of law

for an offence under any law, other than Direct Taxes Laws, for which
the prescribed punishment was imprisonment for two years or more,
with or w ithout fine and which is directl y related to the offence sought
to be compounded.

V. Any offence in respect of whi ch, the compounding application has

already been rejected, except in cases where benefit of rectification is
avai lable in these Guidelines.

VI. The cases of a person as main accused where it is proved that he has
enab led others in tax evasion such as, through entities used to launder
money or generate bogus invoices of sale/purchase without actual
business, or by providing accommodation entries in any other manner as
prescribed in section 277 A of the Act.

Vll. Offences comm itted by a person who, as a result of investigation

conducted by any Central or State Agency and as per information
available with the Pr.CCITI CCITI Pr.DGITI DGIT concerned, has been
found invo lved, in any maImer, in anti-national/terrorist activity .
Vllt. Offences committed by a person which, as per information ava ilable
w ith the Pr. CCITI CC ITI Pr.DG ITI DGiT co ncerned, directly related to
the case under investigation (at any stage including enqui ry, filing of
FlRIcomplaint) by Enforcement Directorate, CBI, Lokpal , Lokayukta or

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 any other Central or State Agency.

IX. Offences committed by a person whose application for 'plea-bargaining'

under Chapter XXI-A of 'Code of Criminal Procedure' in respect of any
offence is pending in a Court or where a Court has recorded that a
mutually satisfactory disposition of such an application is not worked
out and such offence directl y related to offence sought to be
compounded.

X. Any offence wh ich is di rectly related to an offence relating to

(a) undisclosed foreign bank accountlassets in any manner; or

(b) the Black Money (Undisclosed Foreign Income and Assets)

and Imposition of Tax Act, 2015; or
(c) Prohibition of Benami Property Transactions Act, 1988.
Xl. Any offence u1s 276, where the outstanding amount in recovery has not
been deposited before filing the Compounding app lication.

Xli . Any other offence, whi ch the Pr.CClT/ CC IT/ Pr.DOlT/ DOlT
concerned considers not fi t for compoundi ng in view of offence by
habitual/repeat offender.

8.2 Meaning of terms "occasion" and " first offence" for the purpose of these
Guidelines will be as under-
8.2.1 If in one instance, the assessee files multiple applications for one or
more than one Assessment Year (A Ys) , all these appli cations shall be
treated as one "occasion".
8.2.2 First offence mean s -
(a) Offences committed prior to any of the following-
1. the date of issue of any letter/noti ce in relation to the
prosecution or
II. Any intimation relating to filing of prosecution complaint
sent by the Department to the person concerned, or
111. Launching of the prosecution,
whichever is earlier, or

(b) Otrence(s) not detected by the department but voluntarily

disc losed by a person with the filing of application for
Compounding of Offence(s) in the case under the Act for one
assessment year or more.

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 For this purpose, the offence is relevant if it is commi tted by the same
person/entity. Further, the first offence is to be determined separately for
each of the Category B offences.
8.3 Notwithstanding anything contained in these Guidelines, the Board may
relax restrictions in Para 8. 1 above for compounding of an offence in a deserving
case, on consideration of a report from the Pr. Chief Commissioner oflncome tax
of the Region wherein lies the jurisdiction of the case, on the petition of an
applicant.

9. Relaxation of time

9. I The restrictions imposed in Para 7(ii) of these Guidelines for

compounding of an offence in a deserving case may be relaxed with the approval
of the Pr. Chief Commissioner of Income tax of the Region wherei n lies the
j urisdiction of the case, for application filed beyond 24 months but before 36
months from the end of month in which complaint was filed in a court.

9.2 However, in all such cases where relaxation has been provided in this
Para, the compounding charges would be @ I.S times of the normal
compounding charges as applicab le to the offence on the date of filing of the
origi nal compounding application.

10. Authority Competent to Compound an Offence:

10.1 The jurisdictional Pr.CCITI CCITI Pr.DGITI DGIT, is the Competent

Authority for compoundi ng of offences under Category 'A' and Category 'B'.

10.2 If a person has committed an offence U/S 276BI 276BB of the Act for
non-payment of TDSITCS in respect of both resident and non-resident payeesl
co llectee and thereby, the jurisdiction over such person li es w ith more than one
jurisdictional charge. In such cases, the Pr.CCITI CC ITI Pr.DGITI DGIT in
whose jurisdiction compounding application has been tiled will be the
Compctcnt Authority.

10.3 In case an applicant having more than one TAN lying in two or more
jurisdictions wants to file compounding app licati on in respect of offences

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 committed uls 276BI 276BB in respect of two or more TANs falling in two or
more jurisdictions, the application shall be filed before the Pr.CCITI CCIT
having jurisdiction over the TA of the region in which PAN jurisdiction of the
applicant is falling. Such Pr.CCITI CCIT having jurisdiction over such TAN will
be treated as Competent A uthority.

11. Compounding Procedure

1. On receipt of the appl ication for compoundi ng, the report on the same shall
be obtained from the Assessing Officer/Assistant or Deputy Director
concerned who shall submit it promptly alo ng-with duly filled in check-l ist
(Annexure-21, to the Competent Authority, throug h proper channel.

II. (a) In cases where, the compounding ap plication is not found to be

acceptable, then the Competent Authority shall di spose of every such
app lication through a speaking order in the suggested format (Annexure-3 -
Part-II). Such order may be passed w ith in six months from the end of the
month of receipt of the application as far as possible.
(b) In cases where, the compounding applicat ion is found to be acceptable,
then the Com petent Authority shall intimate the applicant that such
appl ication is found to be acceptable along w ith the compounding charges
payable, and other liabilities pending. Such intimation may be issued within
six months from the end of the month of receipt of the appl ication as far as
possible.

lll . Where compounding application is found to be acceptable, the Competent

Authority shall intimate the amount of compounding charges to the applicant,
requiring him to pay the same within one month from the end of the month
of receipt of such intimation by the applicant. On written request of applicant
for further extension of time under exceptional circumstances, the Pr.CCITI
CClTI Pr.DGITI DGIT may extend this period upto 6 months. Extension
beyond 6 months and upto 12 months shall not be permissible except with the
previous approval in writing of the Pr. Chief Commissioner of Income tax of
the Region concerned. However, no extension beyond 12 months from the
end of month in which intimation of compounding charges was given to the
applicant shall be given except with the previous approval of Member (Inv.),

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 CBOT on a proposal of the competent authori ty concerned.

iv. Whenever the compoundi ng charges are paid beyo nd one month from the end
of month in which it was received by the applicant, if extended by the
Competent Authority, he shall have to pay interest at the rate of I % per month
or part of the month on the unpaid amount of compounding charges upto three
months and thereafter at the rate of 2 % if the Competent Authority has
extended the payment period beyond three months.

v. The Competent Authority shall pass the compounding order in the suggested
format (A nnexure-3 - Part-I) within o ne month fro m the end of the month of
payment of compound ing charges. Where compounding charge is not
deposi ted within the time allowed, the compounding application shall be
rejected after g iving the applicant an opportunity of bei ng heard only In

relatio n to compou nding charges payable .

Vl. The order of acceptance/rejection of application of compounding shall be

brought to the notice of the Court, where the prosecution complaint was
filed/or the complaint is pending, immediately through prosecution counsel
in all cases where prosecution proceedings have been instintted.

Vll. Normally any offence in respect of which the compounding app lication has
been rejected is not considered for compounding as per Para 8.1 (iv).
However, if any compounding application has been rejected solely on account
of late payment of compounding charges or shortfall in payment of
compounding charges and if such shortfall is for some bonafide mistakes or
on some other tech nical grounds, such compounding order can be rectified at
the written request of the applicant provided the payment of compounding
charges was made before rejection or time allowed by the Competent
Authority whichever is applicable. However, the applicant will be required
to pay interest as per Clause (iv) of this Para, on the unpaid compounding
charges from the due date of payment as per original intimation of
compounding along with the shortfall in compounding charges.

Vlll. The timelines mentioned for processing the compounding applications

prescribed in these Guidelines are administrative and indicative for work
management and do not prescribe a limitation period for disposal of the
compounding application.

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 IX. Wherever Ihe facility to perform any function relaling 10 process ing of any
compounding ap plication is avai lable on ITBA, such fu nction should be
performed on ITBA .

12. Compounding C ha r ges

12. 1 The compounding charges shall include -

;. Co mpoundin g I'ee- shall be computed in accordance with Para

13 of these Guidelines for various offences.
;;.- P rosecutio n establis hme nt exp enses - to be charged @ 10% of
the compounding fee subject to a min imum of Rs.25,000/- and
;;.- Litigatio n expenses, including Counsel's fee - paid/payable by
the Department in connection with offence(s) compounded by a
single order. (In a case where the li ti gation expenses are not
readily ascertainable, the competent au thority may arrive at
liti gati on expenses, inter alia, on the basis of rates prescribed by
the Government and on the basis of existing records with the
Government and the counsel). Reference may be made to
Board 's leHer F.NO.279/Misc/M-77/2011 -ITJ dated
18/ 10/2016.

12.2 In all cases where relaxation of time as provided III Para 9 of the
Guidelines is allowed, the compounding charges shall be 1.5 times of the nonnal
compounding charges .

12.3 Wherever, extension of time allowed 10 pay compounding charges is

allowed beyond one month from the end of intimation of compounding charges
in accordance with Compounding Guidelines, the applicant shall have to pay
interest @ I % per month or part of month on the unpaid amou nt of the
compounding charges up to three months and thereafter at the rate of 2 % for
period beyond three months.

12.4 It is clarified that the compounding charges are payable in addition to

the outs tanding tax, interest, penalty and any other sum , if any payable or
imposable as per provisions of the Act. Such tax, interest, penalty and any other

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 sum as mentioned in Para 7(i ii) shall be paid be fore fi ling the compounding
application as required in these Guidelines.

13. Comp oundin g fee

For the purpose of computation of the co mpounding fee, the word "tax"
means- tax including surcharge and any cess, by whatever name called, as
applicable. { Th e component of interest is not included as it is already a penal
charge 0 11 tax}

The fees for compounding of offences sha ll be as fo llows:

13. 1 Section 276 (Removal, concealment , tra nsfer or delivery of

proper ty to th wa rt tax recovery)
13.1.1 Compounding fee to be calculated at the rate of 75% of the
outstanding recovery amo unt sought to be thwarted through the
removaV concealment! transfer! delivery of property.

13.2 Secti on 2768 (Fa ilure to p ay the tux dedu cted a t source) and
Section 276 88 (Failure to pay th e tax collected a t source)
13.2. 1 In respect of application for compoundi ng of offences, the
compounding fee shall be calculated as under-
(i) 2% per month or part of a month of the amount of tax in
default disclosed in the compounding applicatio n in those
cases, where no prosecuti on proceedings have been initiated,
and the applicant has SlIo-molO fi led compounding
appl ication, before any offence uls.276B/276BB of the Act
for any period is brought to his knowledge by the
Department. Such type of offence would also constitute an
"occasion" for the purpose of Para 8.1.

However, such offences which arc detected in the course of any

search and seizure or survey operation will not fall in this
category.

JJ
 (ii) 3% per month or part of a month of the amount of tax in
default di sclosed in the compounding application for first
'occasio n' in cases whe rein compounding application has
been filed in response to inti mation of prosecution
proceedings by the Department.

(iii) In respect of any application for subsequent occasion, the

applicable rate for compounding of such an offence will be
5% per month or part of a month of the amount of tax in
default.

13.2.2 The period of default for calculating compounding fee in this

category shall be calculated from the date of deduction to the date of
deposit of tax deducted at source, as is done in respect of calculating
interest under section 20 I (I A) (i i) of the Act, in respect of compounding
application filed .

13.2.3 The compou nding fee shall not exceed the TDS amo unt III

default.

13.3 Section 276C (1) (Willful attempt to evade tax, etc.)

(a) In the cases involving tax sought to be evaded (where evasion of
interest and penalty may be consequential)
1. Where such tax attempted to be evaded exceeds Rs. 25 lakhs,
150% of such tax amount.
11. In any other case, 125% of the tax attempted to be evaded.

(b) In cases involving attempt to evade only the penalty, 100% of such
penalty.

13.4. Section 276C(2) (Willful attempt to evade payment of an y tax,

interest and penalty)
3% per month or part of the month of the amo unt of tax, interest and
penalty, the payment of which was sought to be evaded, for the period

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 of default. The period of default for calculating the compounding fees
shall be as under:
i) Where tax , interest or penalty as per notice of demand under sect ion
156 of the Act is not paid, from the date immediately followi ng the
due date of payment till the date of actua l payment.
ii) Where the self-assessment tax was not paid as specified in section
140A of the Act, from the due date of filing of return of income uls
139( I) of the Act to the date of actual payment.

For computing the period of default, any period of stay of demand

granted by any Income Tax Authority, the Appellate Tribunal or Court
shall be excluded.
13.4.1 The compounding fee shall not exceed tax, interest and penalty,
the payment o f which was sought to be evaded.

13.5 Section276CC (Failure to furnish return of income) and Section

276CCC (Failure to furnish r eturn of income as required under
section 158BC)
13.5.1
(a) In a case of default in furni shi ng the return of income on or before due
date uls 139( I) of the Act, the default period will be comp uted from the
due date uls I39(1) to the date of actual filing ofretum or completion of
assessment, whichever is earlier and compounding fees will be;
I. RsA ,OOOI- per day - Where tax on returned income as reduced
by tax deducted at source, adva nce tax and taxes if any as
enumerated in section 140A( I) of the Act are paid before the due
date of fi li ng of return of that Assessment Year, exceeds Rs. 25
lakhs;
II. Rs. 2,0001- per day - In cases other than in (i) above.
III. However, in cases where the difference between the aggregate
of taxes paid/payable on the returned income and the aggregate
of taxes al ready paid under any provision of the Act as
enumerated in section 140A( I) of the Act, if paid before the due
date of filing of return of that Assessment year, is less than
Rs. I ,00,0001-, th e compounding fees will be restricted to that

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 said difference amount subject to a minimum ofRs. 10,0001-.

(b) In a case of offence of non-compliance of notice uls 142( Ilei) of the Act,
the default period will be computed:
(A) from the due date uls 139( I) to the date speci fied in the noti ce
ulsI42(l) and the compounding fees shall be charged at the rate of:
(i) RsA,OOOI- per day where the tax on returned income as reduced
by tax deducted at source, advance tax, taxes if any as
enumerated in section 140A( I) of the Act are paid before the
due date of filing of return of that Assessment Year, exceeds
Rs.25 lakhs;
(ii) Rs.2,0001- per day in othe r cases, and

(8) forthe period between date specified in notice u/s 142( I) to the date
of fi ling of return of income or completion of assessment, whichever
is earlier, and the compounding fees shall be charged at the rate of:
I. Rs. 50001- per day where the tax on returned income as
reduced by tax deducted at source, advance tax, taxes if any
as enumerated in section 140A (I) of the Act are paid before
the due date of filing of return of that Assessment Year,
exceeds Rs .25 lakhs; and
11. Rs.30001- per day - in other cases.

(c) In a case of an offence of non -compliance of notice uls 148 of the Act,
the default period will be computed:
A) from the date speci fied in such notice till filing of rerum or
assessment whichever is earlier, and the compounding fee s sha ll be
charged at the rate of:
(i) Rs .50001- per day where the tax on returned income as reduced
by tax deducted at source, advance tax, taxes if any as
enumerated in section 140A(I) of the Act arc paid before the
due date of filing of rerum of that Assess ment Year, if any
exceeds Rs.25 lakhs and
(i i) Rs .30001- per day - in other cases,

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 B) In a case, if there is also a default of not filing of return of income
within due date prescribed uls 139( I), then compounding fee shall
be computed for the period between the due date uls 139( 1) to the
date specified in the notice uls 148, at the rate of-
i) Rs.4000/- per day where the tax on returned income as reduced by
tax deducted at source, advance tax, taxes if any as enumerated in
section 140A( I) of the Act are paid before the due date of filing of
return of that Assessment Year, if any exceeds Rs.Z5 lakhs and
ii) Rs.2,OOO/- per day - in other cases,

(d) In a case of an offence of non-compliance of notice uls l53NI53C of

the Act (prior to 0 tl04/Z0ZI), the compounding fees shall be charged
A) from the date specified in such notice till filing of return or
assessment whichever is earlier, at the rate of -
(i) Rs . 5,000/- per day where the tax on returned income as
reduced by tax deducted at source, advance tax, taxes if any
as enumerated in section 140A( I) of the Act are paid before
the due date of filing of return of that Assessment Year, if any
exceeds Rs.Z5 lakhs and
(ii) Rs.3 ,OOO/- per day - in other cases,
8 ) In such a case, if there is also a default of not filing return of income

within due date prescribed u/s 139( I), then for the period from the
due date u/s 139( I) to the date specified in the notice uls 153N 153C
(prior to 0 1/04/Z021) , compounding fees at the rate of -
(i) Rs.4000/- per day where the tax on returned ,"come as
reduced by tax deducted at source, advance tax, taxes if any
as enumerated in section 140A (I) of the Act are paid before
the due date offiling of return of that Assessment Year, if any
exceeds RS.25 lakhs and
(i i) Rs.2,000/- per day - in other cases.

(e) In a case where return of income filed is not only late but Self-
Assessment Tax is not paid:

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 I. These constitute two separate offences which are to be handled
separately under sections 276CC and 276C(2), and
II . Action uls 276C (2) is to be undertaken only after the issue of demand
notice uls 156 pursuant to sections 143(1)/143(3)/144 etc.

13.5.2 The compounding fee sha ll not exceed the tax in default on
returned income or assessed income, w hichever is higher.

13.5.3 In a case the income determined ulsI43( 1) is more than the

returned income, tax on the same wi ll be applied for computing tax slab
prescribed in Para 13.5. 1.

13.6 Section 276DD- (Fa ilure to comply with the provisions of Section
269SS) (prior to 01.04.89)

A sum equal to 20% of the amount of any loan or deposit accepted in

contravention of the provisions of Section 269SS.

13.7 Section 276E (Failure to comply with the provision s of Section

269T) (prior to 01.04.89)

A sum equal to 20% of the amount of deposit repaid in contravention

of the provisions of Section 269T.

13.8 Section 277 (False statemen t in ve rification, etc.,) a nd Section 277A

(Fa lsification of books of account or document, etc.,) and Section 278
(Abetment of false return, etc.)

13.8.1 Where same set offacts and ci rcumstances attract prosecution uls
277 as well as section 278, the compounding fec shall be charged
for offences under these sections by treating them as one offence.

13.8.2 Where same set of facts and circumstances attract prosecution

uls 277 or 278 in addition to another offence in connection with
which prosecution uls 277 or 278 was attracted in case of the
same person, no separate compounding fee shall be charged for

16
 offence U/S 277 or 278. For example, where a person is charged
with an offence u/s 276C (I) as also U/S 277 or 278, in respect of
the same facts and circumstances, the compounding fees shall
be charged only for the offence U/S 276C ( I) at the rates
prescribed for the said section.

13.!!.3 In a case where no offence under any other section of the Act is
involved except U/S 277 or 278 of the Act, the compounding fee
shall be decided by the Competent Authority having regard to the
amount of tax which would have been evaded as a result of such
offence uls 277 or 278 subject to a minimum compounding fee of
Rs. 1,00,0001- (Rupees One Lakh) which may be increased based
on the assessment of loss caused to the revenue, directly or
indirect ly, fo r each of such offence on completion of
assessment/ reassessment.

13.8.4 In a case where provisions of section 277 A are invoked,

compounding fee shall be charged at the rate of 100% of the sum
equal to the aggregate amount of such false or omitted entry
involved.

13.9 Co-accused a nd Abcttor-

Section 278B (OITences by comp ani es) and Section 278C (Offences by
Hindu undivided famili es)

13.9.1 Where an offence under this Act has been committed by a

Company or HUF, a compounding fee at the rate of 10% of the
'compounding fee for the main offence' shall be charged from
each of the person charged under sections 2788 or 278C.
However, the Competent Authority, after considering the extent
of invo lvement of any or all co-accused or abettor, may enhance
or reduce or waive the amount of compounding fee to be
charged fro m any or all the co-accused or abettor. The
compounding fees chargeable from the co-accused or abettor

17
 shall be in add ition to the compounding fees which may be
chargeable from the main accused.

13.9.2 It is further clarified that:

(a) In the case of prosec ution proceedings under sections 278B

or 278C of the Act unless the main accused I.e.
CompanylHUF comes forward for compounding, the
offence of the co-accused cannot be compounded
separately.

(h) If one or more co-accused has not filed the compounding

ap plication or is not agreea ble to the payment of
compounding charges, as the case may be, then unless the
main accused, on an undertaking obtained and furnished
from such co-accused, unequivocally undertakes to pay the
compounding charges on his own behalf and on behal f of
all such co-accused as well , the compounding of the offence
of the main accused cannot be accepted.

13.10 Offences, other than those described in Para 13. 1 to 13.9, for which no
compounding fee has been prescribed, the Com petent Authority may determine
the amount of compounding fee having regard to the nature and magnitude of
the offence, loss of revenue di rectly or indirectly attributa ble to such offence,
subject to levy ofa minimum compounding fee ofRs 1,00,000/- (Ru pees One
lakh) for each such offence.

13.11 The prescribed compounding charges shall be applicable while

compounding any offence. However, in extreme and exceptional cases of
genuine financial hardship, the compounding charges may be suitably reduced
with the approval of the Finance Mini ster.

14. In case any penalty proceedings which is related to the offence sought to be
compounded are pending at the time of filing of the compounding application, efforts

18
should be made to conclude such penalty proceedings exped it iously and recover
demand before concluding the compounding proceedings.

15. These Guidelines shall come into immediate effect and shall be applicable to all
applications for compounding received on or after the issue date of these Guidelines.

16. The Pr.CCsIT/ CCs IT/ Pr.DGsIT/ DGslT are to circ ulate the above revised
Guidelines along with its Annexure os. I, 2 and 3 among all the officers of their
Regio n for compliance.

Yours faithfully,
Encl: As above

/Y\
r4"Novel Roy
Deputy Se~ret\ry (Inv.V),
CBDT, New Delhi

Copy to-
I. The PS to the Revenue Secretary
2. The Chaimlan, CBDT
3. All Members, CBDT
4. All officers of the rank of Joi nt Secretary/CfT and above in CBDT
S. The CIT (Media & Technical Policy), CBDT
6. The ADG (Systems)-4 for uploading on www. incometax india.gov.in
7. Additional DIT, Database cell, for uploading on
\V'vw. irso nice rson line .go v. in

19
 Annexure I

Format of a pplication in t he form of Aftid avi t for Compoundin g of O ffences u nder

Income-tax Act, 1961 to be submitted separ ately by each a pplica nt
S.No. Partic ulars Remarks

I. Name of the applicant

2. Status
3. Offences committed uls •
4. A Ys I Datel period involved in offence
5. Status of case (i.e., whether contemplated!
pending in Court/convicted!acqu itted)

6. Date of fili ng of complaint, ifany

7. Whether the offence(s) committed by the
applicant is one for which complaint(s)
was fi led with the competent court 12
months pnor to the filing of the
application for compounding
8. Particulars of offences along-with
justification for compounding (separate
sheet)
9. Whether the applicant has paid the
amoun t of tax, interest, penalty and any
other sum due relating to the offence
10. Whether the applicant undertakes to pay
further tax, interest, penalty and any other
amount as IS found to be payable on
verification of the record.

II. Whether the applicant undertakes to pay

the compounding charges as shall be
intimated by the department.

12. Whether simil ar offences in the case of

the applicant have been compounded
earlier. If yes, how many occasions, as
defined in 8.2. 1. Give details in annexure.

13. Whether the offence is first offence as

defined in Para8.2 of the Guidelines

20
14. Whether the offence has been committed
by the applicant who, as a result of
investigation conducted by any Central or
State agency has been found involved, in
any manner, in anti-national/ terrorist
activity
15. Whether any enquiry/investigation being
conducted by Enforcement Directorate,
CBI, Lokpal, Lokayukta or any other
Central or State agency is pending
against the applicant? If so, particulars
may be given
16. W hether the app licant was convicted by a
court of law for an offence under any law,
other than the Direct Taxes Laws, for
which the prescribed punishment was
imprisonment for two years o r more, with
or wi thout fine. If so, particulars may be
given along wit h a copy of the court's
order.
17. W hether, the application for 'plea-
bargaining' under Chapter XXI-A of 'Code
of Crim inal Procedure' is pending in a
Court and the Court has recorded that
a mutually satisfactory di sposition' of such
an appli cation is not worked out?

18. Whether the applicant was conv icted

earlier with an impri sonment for a period
tw o years or more by a court of law,
19. Whether it is an offence in respect of
which, the compounding application has
already been rejected.
20. Whether it is an offence which is directly
related to an offence relating to
undi sclosed foreign bank acco un t/asse ts
in any manner
21. Whether it is an offence wh ich is d irectly
related to any offence under the Black
Money (Undi sclosed Foreign Income and
Assets) and Imposition of Tax Act, 20 15.
22 . Whether it is an offence which is directly
related to any offence under The
Prohibition of Be nami Property
23 . Whether it is an offence U/S 275A , 275B.

2t
 VERIFICATION

I ..................................... son/daughter of ............................................... In the

capacity of
.................... ............. certity and solemnl y affirm that the information in the above
co lumns is
true and correct to the best of my knowledge and belief.

Place: Signature

Date: Designation----
Current address--

• All offences for which compounding is sought

22
 Annexure 2

Suggested Check List for Compounding as per the Guidelines issued by the CBDT vide
F.No.285/08/2014-IT (Inv.V)/196 dated 16.09.2022 on Compounding of Offences

(To be submitted by AOIADITIDDIT to the authority competent 10 compound through proper

channel)

(A case can be compounded only if the answers to S. No.1 to 21 matches with the answers
given below in remarks column.)

Name of the applicant '-

Status

Offences uls

AYs/ Date/ period invol ved in offence :-

Date of filing of complaint, ifany

Status of case (i.e. whether Contemplated!

Pending in Court! Convicted! Acquitted)

S.No. Particulars Remarks Reference of

(vis-a-viS Compounding Guidelines) the File
submitted
I. The applicant has filed a written request for compounding Yes On Page
the offence in the prescribed Proforma. no ...........

2. Whether the applicant has paid the amount of tax, interest Yes On Page
and penalty& any other sum due relati ng to the default as no .... ,
prescribed in the Guidelines.

3. Whether on verification of record any further amount of Yes/No, If yes. give

tax, interest and penalty& any other sum was found If yes date detail s in
payable by the applicant. of brief. Add
intimation annexure if
and date of required.
payment. On Page no .. .

23
4. Whether the applicant has undertaken to Yes On Page
pay the compounding charges computed as per Para 12 & no ....... ... .
13 of the Guidelines.

5. Whether the offence(s) committed by the applicant is one No On Page

for which complaints) was fil ed with the competent court no ...... .... .
12 months prior to the receipt of application for
compounding
6. Whether the offence is covered under Category 'A' and No If yes, give
beyond scope of3 occasions as specified in para 8.1(i). details in
brief. Add
annexure if
required.
On Page no ....

Whether the offence is the first offence as defined in para Yes lf no, give
7. 8.2 of the Guidelines details in
INOTE: THIS rs APPLICABLE 0 LY IN CASEOF A brief. Add
Category 'B' OFFENCE. annexure if
required.
On Page no ....

8. Whether th e offence has been committed by an applicant No If yes, give

who, as a result of investigation conducted by any Central details in brief.
or State agency has been foun d involved, in any manner, in Add annexure
anti-nationaVterrorist activity if required.
On Page no .. ..
9. Whether the offence committed by the applicant is directl y No rf yes, give
related to a case under in vest igation (at any stage including details in
enqlllry, filing of FIR/co mpl aint) by Enforcement bri ef. Add
Directorate, CBI, Lokpal, Lokayukta or any other Central or annexure
State agency' if required.
On Page
no .. ..
10. Whether the offence has been committed by the applicant No If yes, give
who, was convicted by a COUl1 of law fo r an offence under details in
any law, other than the Direct Taxes Laws, fo r which the brief. Add
prescribed punishment was imprisonment for two years or annexure
more, with or without fin e' if required.
On Page
no ....

24
11. Whether the appli cation for 'plea-bargaining' under Chapter No If yes give
XXI-A of'Code of Criminal Procedure' is pending in a Court details in brief.
or a Court has recorded that a 'mutually satisfactory Add annexure
disposition' of such an application is not worked out" if required.
On Page no ....
12. Whether the offence is one committed by an applicant for No If yes, give
which he was convicted by a court of law with an details in
imprisonment for two years or mo re. brief. Add
annexure
if required.
On Page
no ....

13. (i) Whether it is an offence in respect of which, the (i) YesfN If yes give
compounding application has already been rejected, 0 details in
(ii) if yes whether it is a case where relaxation is available brief. Add
in the Guidelines. annexure
(i i) Yes [ if required.
If (i) is On Page
yes
no ....
14. Whether it is a case of a person who is main accused and No Jfyes, give
where it is proved that he has enabled others in tax evasion details in
such as, through shell compames or by providing brief. Add
accommodation entries in any other manner as mandated in annexure
sec.277 A of the Act if required.
On Page
no ... .

15. Whether it is an offence d irectly related to an offence No Jfyes, give

relating to details in
a) undisclosed foreign bank account/assets 1Il any brief. Add
manner. annexure
b) Black Money (U ndi sclosed Foreign Income and if required.
On Page
Assets) and Imposition of Tax Act, 20 15.
no ....
c) Prohibition of Benami Property Transactions Act.
16. Whether the case pertains to the Issue of Removal, No Jfyes, give
concealment, transfer or delivery of property to thwart tax details in
recovery? brief. Add
(i) And if yes whether the outstanding amount 1Il annexure
recovery has been deposited before filin g the if required.
On Page
Compounding application .
no ....
17. Amount of compounding charges Rs. On Page
computed by AO/ADlTIDDlT as per Paras l 2 & 13 of no .. .........
the Guidelines.
25
 18. The compounding charges are in accordance with Paras 12 Yes lf no, give
and 13 of the Guidelines reasons.
On Page no .. ..
19. The fac tors, such as conduct of the person, nature and Yes !f no, give
magnitude of the offence and facts and circumstance of the detai ls in brief.
case have been considered whil e dealing Add annexure
with the compounding application and in calculating if required.
compounding charges On Page no ....
20. Whether th e cases o f Co-accused are being considered as YeslNot !fyes , give
per Para 13.8 Appli cabl details in brief.
e Add annexure
if required.
On Page no ....

21. Any other fact relating to the person/case relevant for No If yes, give
consideration of the Competent Authority details in
brief. Add
annexure
if required.
On Page
no ....

Signature:
Name:
Designation:
Date:
Recommended by:

I . Jt.CITI Addl. CIT/Jt. DlT /A ddl. DlT .. .... .... .. .. ................ . SignaturelNamelDesignati onlDate

2. PCITIPDIT/CITIDIT .. .. ... .. .. ....... .. ..... ........ .. ... . Signature/NameIDesignation/Date

* ote: This may be given on the basis of information furnished by the applicant in his
application for compounding or information already available with the Competent
Authority for compounding

26
 Annexure 3
(Suggested Format)

Part-I
O rder u/s 279(2) of the Income-tax Act, 196 1 fo r Compounding of an Offence as mentioned in Par a
I I (v) of the Guidelin es issued bv the C BOT vide F.No.2SS/OSI2014-IT (Inv.V)/ 196 dated 16.09.2022
on Compounding of Offences

Ord er u/s 279(2) of Income-tax Act, 1961

Name of !be person
Status
Offences uls .-
AYs I Datel period involved in offence
Date of filing of complaint, if any
Status of case (i.e. whether contemplated!:- Pendi ng in
Court! Convicted! Acquitted)/:-Dale of hearing, if
any:-
Date of order: -
Order u/s 279(2) of the In co me-tax Act, 196 1

I. the Principal Chief CommissionerlChief Commissioner of Income-lax !Principal Director GeneraVDirector

General of Income-tax. in exercise of powers vesled in 111e by virtue of the provisions of sub-section 2 of
section 279 of the Income-tax Act, 196 1 hereby compound the offence(s) uls .. .. .. . of the Income -tax Act, 1961
for the A.Y.(s) I Datel period ........... committed by/s.lShri/Ms.. .. .... .... .... .
The Statement of the fac ts of the case are enclosed as Annex ure - 'A'
Place:
Date:
Seal:
Signature
Principal Chief
Comm iss ioner/Chief Commissioner
of Income-tax / Principal Director
Genera VDirector General of
Income-tax
Copy to fo r infonnation and necessary action:
The ProCommissioner of Income Tax! Pr. Director of Income Tax -
The Assessing Officer/ ADlTIDDlT-
The ADlTIDDlT (Prosecution)-------
The Prosecution Counsel (if the case is pend ing in the Court) ------
The applicant (By name) -
Guard fi le.
Signature
ACIT/ ITO (Hq.)
0 /0 the Pr. CCIT/CCIT/ Pr. DGIT/DGIT

27
 Annexure 3
(Suggested Format)

Part-U
Order uls 279(2) of the Income-tax Act, 1961 for rej ecting the Compounding of an Offence as
mentioned in Para 11 (iil(a) of the Guidelines issued by the CBDT vide F. o. 285/08/2014-
IT(\nv.V)/196 dated 16.09.2022 on Compounding ofOlTences
Ord er uls 279(2) of Income-tax Act, 1961

Name of the person

Status
Offences ul s
A Ys I Datel period involved in offence:-
Date of filing of complaint. if any:-
Status of case (i .e. whether Contemplated!:-
Pending in Court! Convicted! Acquitted):-
Date of hearing. if any:-
Dale of order:-

Order Ills 279(2) of the Income-tax Act, 1961

I. the Principal Chief Commissioner/Chi ef Comm issioner of Income-taxlPrincipal Director GenerallDireClor
General of Income-tax. in exercise of powers vested in me by virtue of the provisions of sub-section 2 of
section 279 of the Income-tax Act. 1961 hereby decline the prayer to compound the offence(s). uls ...... of the
Income-tax Act. 196 1 for the A.Y.(s) / Date/ period ......... .. committed by M/s.lShri / Ms ........ .. .
The case was not found to be a tit case fo r compounding as " ............. (menlion reasons) ............ . "
The Statement of the facts of the case are enclosed as Annexure - 'A'
Place:
Date:
Seal
Signature
Principal Chief CommissionerlChief
Commissioner of Income-tax I Principal
Director GenerallDirector General of
Income-tax
Copy to:
The ProCommiss ioner of Income Taxi Pr. Director of Income Tax
The Assessing Officer/ ADIT/DDIT ------
The ADITIDDIT(Prosecllt ion) -------
The Prosecution Counsel (if the case is pending in the Court)------
The appl icant (By name) ------
Guard fi le Sd!-
ACITI ITO (Hq.)
0 /0 lhe Pr. CC IT/CCIT/ Pr. DGITIDGIT

28
 /,

Annexure -A

Statem ent of facts

The statement of facts should, inter alia, contain the following:

I. Detail of application filed

An application for Compounding of Offences committed u/s .. ..... . of the Income-tax

Act, 1961 was filed in prescribed format by MIs. 1Mr. IMs . .... ........ on . . .. . ..... .

2. Brief facts

3. Whether complaint has been filed

A complaint was fi led in the Court of ..... ........... ... ....... .. .... on .... ....... ... .. ... and the case is
still pending in the court!the Court has convicted the person who has filed an appeal against the
conviction order that is pending in the Court! the Court has acquitted the person & the
department has filed an appeal agai nst the acquittal order that is pending in the Court or an
appeal against the acquittal o rder is contemplated.

OR

The complaint is yet to be filed in the Court.

4. In case of order accepting compounding, details of payment of compounding charges

by the person.

5. Direction to the AOI Standing Counsel to take necessary action to impl ement the orders at
the earl iest.

29