I want to compound my income tax offence. What do the current guidelines let me do?
Considerably more than the old ones. The guidelines of 17 October 2024 abolish the Category A/B classification, remove the cap on the number of applications and the 36-month outer time limit, extend compounding to ss.275A and 276B, allow a co-accused to apply for a company or HUF, and set TDS compounding charges at a single 1.5% per month with no interest on delayed payment of the charge.
Decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Ministry of Finance) on 2024-10-17, reported as Circular F. No. 285/08/2014-IT(Inv. V)/163, dated 17 October 2024, issued under section 119 read with the Explanation to section 279 of the Income-tax Act, 1961; read with the FAQs in Circular No. 4/2025 [F. No. 285/08/2014-IT (Inv. V)/281], dated 17 March 2025. It bears on section 279(2), section 119, section 275A, section 275B, section 276B, section 276BB, section 276CC, section 277A, section 278B, section 278C of the Income Tax Act 1961, in Prosecution and TDS Defaults matters.
They supersede the 2008, 2014, 2019 and 2022 guidelines and apply to pending applications as well as new ones, so a rejection resting on the old restrictions may be worth taking up again. An application can now be made suo motu at any time after the offence, whether or not it has come to the department's notice, and either before or after proceedings are instituted — which changes when the decision to apply has to be taken.
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Section 279(2), read with sections 2(15A) and 2(21), allows any offence under Chapter XXII to be compounded, either before or after the institution of proceedings, by the Pr. CCIT, CCIT, Pr. DGIT or DGIT. The Board had issued four successive sets of compounding guidelines - by letters dated 16 May 2008, 23 December 2014, 14 June 2019 and 16 September 2022. Those were reviewed and, in supersession of all of them, the present guidelines were issued on 17 October 2024 in exercise of the power under section 119 read with the Explanation to section 279. They take effect from the date of issue and apply to applications filed after that date and to applications already filed but not yet disposed of. The Board followed them with a set of frequently asked questions in Circular No. 4/2025 dated 17 March 2025.
The guidelines supersede the 2008, 2014, 2019 and 2022 guidelines and apply to pending as well as new applications. The Board's own summary of what changed is that the categorisation of offences has been eliminated, the limit on the number of occasions for filing an application removed, a fresh application allowed once a curable defect is cured, compounding allowed for offences under sections 275A and 276B, and the earlier outer limit of 36 months from the filing of the complaint removed. Every offence under the Act is now compoundable, though six classes may be compounded only with the approval of the Chairman, CBDT - a conviction of two years or more under the Act, a related conviction of two years or more under another law, involvement in anti-national or terrorist activity, facilitation of tax evasion of the kind described in section 277A by a person other than the main accused, an offence directly related to one under the Black Money Act 2015 or the Benami Act 1988, and an offence under section 275A or 275B. An application may be filed suo motu at any time after the offence is committed, whether or not it has come to the Department's notice, and after prosecution has been launched. It must be in the Annexure-1 format as an affidavit on Rs. 100 stamp paper, be preceded by payment of all tax, interest including interest under section 220, penalty and other sums relating to the offence, and be accompanied by an undertaking to pay the compounding charges and to withdraw related appeals. A non-refundable application fee is payable - Rs. 25,000 for a single application and Rs. 50,000 for a consolidated one - adjustable only against the compounding charges for that application. In an offence by a company or a Hindu undivided family, the main accused or a co-accused may apply separately or jointly, and payment by any one of them results in the offence being compounded for the main accused and all co-accused; no separate fee is payable for a co-accused. Compounding is not a matter of right and may be refused in exceptional cases by a written reasoned order, for instance where the applicant is a habitual offender or on the gravity of the offence.
The revision consolidates sixteen years of accumulated guidance into one document and shifts the incentive towards voluntary regularisation before detection. Removing the categorisation of offences and the outer time limit means eligibility no longer turns on which list an offence sat in or on how long ago the complaint was filed; delay is priced instead of barred, the charge rising by 50 per cent where the application is made more than twelve months after the end of the month in which the complaint was filed. Repetition is likewise priced rather than barred: a second, third or fourth application for an offence of a type already applied for attracts 1.2, 1.4 and 1.6 times the normal charge, while an offence applied for the first time is charged at the normal rate, and all applications made under the earlier guidelines are treated together as the first application. Defects are made curable within one month without a fresh fee, and an application rejected earlier only for a curable defect - unpaid tax, the wrong proforma, the wrong year or section, short payment, a missing undertaking - may be made again; one rejected on merits may not. Dispensing with the requirement that the main accused apply removes the practical obstacle that left directors and members of a company or Hindu undivided family without a route to relief, and paying once now clears both the main accused and the co-accused. Two provisions address the reasons taxpayers stayed away: the guidelines record that non-residents avoid compounding because they fear it will be read as an admission, and direct the Competent Authority to state in the order that it is not; and the Board confirms in its FAQs that no interest or additional charge attaches to an extension of time to pay, extensions being available up to six months from the Competent Authority, to twelve with the approval of the Pr. CCIT of the region and to twenty-four with the approval of the Chairman or an authorised Member, and not at all beyond twenty-four months. The timelines for disposal are stated to be administrative and not a period of limitation.
This compounding order is intended to resolve the offence under section 279(2) of the Act and should not be construed as an admission of the offence(s) by the applicant.
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Handle my notice → Ask a CA on WhatsAppConsiderably more than the old ones. The guidelines of 17 October 2024 abolish the Category A/B classification, remove the cap on the number of applications and the 36-month outer time limit, extend compounding to ss.275A and 276B, allow a co-accused to apply for a company or HUF, and set TDS compounding charges at a single 1.5% per month with no interest on delayed payment of the charge. This was decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Ministry of Finance) and bears on section 279(2), section 119, section 275A, section 275B, section 276B, section 276BB, section 276CC, section 277A, section 278B, section 278C of the Income Tax Act 1961. It is reported as Circular F. No. 285/08/2014-IT(Inv. V)/163, dated 17 October 2024, issued under section 119 read with the Explanation to section 279 of the Income-tax Act, 1961; read with the FAQs in Circular No. 4/2025 [F. No. 285/08/2014-IT (Inv. V)/281], dated 17 March 2025. They supersede the 2008, 2014, 2019 and 2022 guidelines and apply to pending applications as well as new ones, so a rejection resting on the old restrictions may be worth taking up again. An application can now be made suo motu at any time after the offence, whether or not it has come to the department's notice, and either before or after proceedings are instituted — which changes when the decision to apply has to be taken. If it applies to you, the first step is this: Check which set of guidelines your pending application is being decided under; these apply to pending applications from 17 October 2024.
Section 279(2), read with sections 2(15A) and 2(21), allows any offence under Chapter XXII to be compounded, either before or after the institution of proceedings, by the Pr. CCIT, CCIT, Pr. DGIT or DGIT. The Board had issued four successive sets of compounding guidelines - by letters dated 16 May 2008, 23 December 2014, 14 June 2019 and 16 September 2022. Those were reviewed and, in supersession of all of them, the present guidelines were issued on 17 October 2024 in exercise of the power under section 119 read with the Explanation to section 279. They take effect from the date of issue and apply to applications filed after that date and to applications already filed but not yet disposed of. The Board followed them with a set of frequently asked questions in Circular No. 4/2025 dated 17 March 2025. The matter was decided on 2024-10-17 by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Ministry of Finance). On those facts the CBDT Circulars & Instructions held as follows. The guidelines supersede the 2008, 2014, 2019 and 2022 guidelines and apply to pending as well as new applications. The Board's own summary of what changed is that the categorisation of offences has been eliminated, the limit on the number of occasions for filing an application removed, a fresh application allowed once a curable defect is cured, compounding allowed for offences under sections 275A and 276B, and the earlier outer limit of 36 months from the filing of the complaint removed. Every offence under the Act is now compoundable, though six classes may be compounded only with the approval of the Chairman, CBDT - a conviction of two years or more under the Act, a related conviction of two years or more under another law, involvement in anti-national or terrorist activity, facilitation of tax evasion of the kind described in section 277A by a person other than the main accused, an offence directly related to one under the Black Money Act 2015 or the Benami Act 1988, and an offence under section 275A or 275B. An application may be filed suo motu at any time after the offence is committed, whether or not it has come to the Department's notice, and after prosecution has been launched. It must be in the Annexure-1 format as an affidavit on Rs. 100 stamp paper, be preceded by payment of all tax, interest including interest under section 220, penalty and other sums relating to the offence, and be accompanied by an undertaking to pay the compounding charges and to withdraw related appeals. A non-refundable application fee is payable - Rs. 25,000 for a single application and Rs. 50,000 for a consolidated one - adjustable only against the compounding charges for that application. In an offence by a company or a Hindu undivided family, the main accused or a co-accused may apply separately or jointly, and payment by any one of them results in the offence being compounded for the main accused and all co-accused; no separate fee is payable for a co-accused. Compounding is not a matter of right and may be refused in exceptional cases by a written reasoned order, for instance where the applicant is a habitual offender or on the gravity of the offence.
The revision consolidates sixteen years of accumulated guidance into one document and shifts the incentive towards voluntary regularisation before detection. Removing the categorisation of offences and the outer time limit means eligibility no longer turns on which list an offence sat in or on how long ago the complaint was filed; delay is priced instead of barred, the charge rising by 50 per cent where the application is made more than twelve months after the end of the month in which the complaint was filed. Repetition is likewise priced rather than barred: a second, third or fourth application for an offence of a type already applied for attracts 1.2, 1.4 and 1.6 times the normal charge, while an offence applied for the first time is charged at the normal rate, and all applications made under the earlier guidelines are treated together as the first application. Defects are made curable within one month without a fresh fee, and an application rejected earlier only for a curable defect - unpaid tax, the wrong proforma, the wrong year or section, short payment, a missing undertaking - may be made again; one rejected on merits may not. Dispensing with the requirement that the main accused apply removes the practical obstacle that left directors and members of a company or Hindu undivided family without a route to relief, and paying once now clears both the main accused and the co-accused. Two provisions address the reasons taxpayers stayed away: the guidelines record that non-residents avoid compounding because they fear it will be read as an admission, and direct the Competent Authority to state in the order that it is not; and the Board confirms in its FAQs that no interest or additional charge attaches to an extension of time to pay, extensions being available up to six months from the Competent Authority, to twelve with the approval of the Pr. CCIT of the region and to twenty-four with the approval of the Chairman or an authorised Member, and not at all beyond twenty-four months. The timelines for disposal are stated to be administrative and not a period of limitation. In the words reproduced by the source cited on this page: "This compounding order is intended to resolve the offence under section 279(2) of the Act and should not be construed as an admission of the offence(s) by the applicant."
It was decided by the CBDT Circulars & Instructions on 2024-10-17 and is reported as Circular F. No. 285/08/2014-IT(Inv. V)/163, dated 17 October 2024, issued under section 119 read with the Explanation to section 279 of the Income-tax Act, 1961; read with the FAQs in Circular No. 4/2025 [F. No. 285/08/2014-IT (Inv. V)/281], dated 17 March 2025. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 279(2), section 119, section 275A, section 275B, section 276B, section 276BB, section 276CC, section 277A, section 278B, section 278C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The guidelines supersede the 2008, 2014, 2019 and 2022 guidelines and apply to pending as well as new applications. The Board's own summary of what changed is that the categorisation of offences has been eliminated, the limit on the number of occasions for filing an application removed, a fresh application allowed once a curable defect is cured, compounding allowed for offences under sections 275A and 276B, and the earlier outer limit of 36 months from the filing of the complaint removed. Every offence under the Act is now compoundable, though six classes may be compounded only with the approval of the Chairman, CBDT - a conviction of two years or more under the Act, a related conviction of two years or more under another law, involvement in anti-national or terrorist activity, facilitation of tax evasion of the kind described in section 277A by a person other than the main accused, an offence directly related to one under the Black Money Act 2015 or the Benami Act 1988, and an offence under section 275A or 275B. An application may be filed suo motu at any time after the offence is committed, whether or not it has come to the Department's notice, and after prosecution has been launched. It must be in the Annexure-1 format as an affidavit on Rs. 100 stamp paper, be preceded by payment of all tax, interest including interest under section 220, penalty and other sums relating to the offence, and be accompanied by an undertaking to pay the compounding charges and to withdraw related appeals. A non-refundable application fee is payable - Rs. 25,000 for a single application and Rs. 50,000 for a consolidated one - adjustable only against the compounding charges for that application. In an offence by a company or a Hindu undivided family, the main accused or a co-accused may apply separately or jointly, and payment by any one of them results in the offence being compounded for the main accused and all co-accused; no separate fee is payable for a co-accused. Compounding is not a matter of right and may be refused in exceptional cases by a written reasoned order, for instance where the applicant is a habitual offender or on the gravity of the offence. It arises in Prosecution and TDS Defaults matters, on section 279(2), section 119, section 275A, section 275B, section 276B, section 276BB, section 276CC, section 277A, section 278B, section 278C of the Income Tax Act 1961, and was decided by Central Board of Direct Taxes, Ministry of Finance. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where an application was rejected on offence categorisation, on the number of earlier applications, or on the 36-month limit, take the point that those restrictions no longer exist. For a TDS default, compute the compounding charge at the single 1.5% per month rate and resist any demand for interest on delayed payment of the charge. Use them to hold the officer deciding your application to the department's own position, but do not treat them as settling how a court will read the offence.
Still good law. In force and unmodified. The Board's own FAQ circular, Circular No. 4/2025 dated 17 March 2025, records that the guidelines superseded all existing guidelines on the subject and apply to pending as well as new applications from 17 October 2024, and answers fifty-two questions on them without amending any provision. No later replacement or amendment is annotated on the guidelines. The FAQ also settles two points that could not previously be verified: no interest or additional charge is payable on an extension of time to pay the compounding charges under para 9.4, and the prosecution establishment and litigation expenses charged under the earlier guidelines have been removed. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Read the guidelines with Circular No. 4/2025 dated 17 March 2025, the Board's FAQs on them; several practical questions - how charges are computed for an application that was pending or rejected under the earlier guidelines, who the Competent Authority is where TDS defaults straddle jurisdictions, what happens where the company is in insolvency - are answered only there. Two cautions on figures. The compounding charges themselves are in Annexure-4, which is a separate document and was not read; the commonly quoted single rate of 1.5% per month for a TDS default is consistent with the FAQ's worked illustration, in which a default of Rs. 10,00,000 for three months carries a normal compounding charge of Rs. 45,000, but it should be checked against Annexure-4 before it goes into an application. And note the guidelines' own enabling power: section 119 read with the Explanation to section 279, not section 279(2). Two paragraphs are worth quoting to the Competent Authority verbatim. Para 4.1.3: "The compounding application or 'Consolidated Compounding Application' may be filed suo-moto at any time after the offence(s) is committed, irrespective of whether it comes to the notice of the Department or not. The Compounding Application or the Consolidated Compounding Application may also be filed after the launch of prosecution proceedings." Para 10.7: "If the application is made beyond 12 months from the end of the month in which the prosecution complaint is filed, the compounding charges shall be increased by 50% of the amount calculated as per paras 10.2 to 10.5 above." Both were transcribed from the CBDT PDF on the department's own site on 7 September 2026. Note also that the date line on that PDF is a scanned stamp that does not transcribe; the date 17.10.2024 rests on the department's page metadata, the PIB release of 17 October 2024 and the subject line of Circular No. 4/2025. Annexure-4, which contains the compounding charges themselves, and Annexure-1, the prescribed application format, are separate documents and were not read, so no rate should be quoted from this entry. The interaction with case law decided under the superseded 2014 guidelines - in particular the treatment of a 'first offence' - was not re-verified on this read. No decision applying the 2024 guidelines was read, although several High Court decisions on compounding post-dating them appear in the database and are listed as leads. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The guidelines supersede the 2008, 2014, 2019 and 2022 guidelines and apply to pending as well as new applications. The Board's own summary of what changed is that the categorisation of offences has been eliminated, the limit on the number of occasions for filing an application removed, a fresh application allowed once a curable defect is cured, compounding allowed for offences under sections 275A and 276B, and the earlier outer limit of 36 months from the filing of the complaint removed. Every offence under the Act is now compoundable, though six classes may be compounded only with the approval of the Chairman, CBDT - a conviction of two years or more under the Act, a related conviction of two years or more under another law, involvement in anti-national or terrorist activity, facilitation of tax evasion of the kind described in section 277A by a person other than the main accused, an offence directly related to one under the Black Money Act 2015 or the Benami Act 1988, and an offence under section 275A or 275B. An application may be filed suo motu at any time after the offence is committed, whether or not it has come to the Department's notice, and after prosecution has been launched. It must be in the Annexure-1 format as an affidavit on Rs. 100 stamp paper, be preceded by payment of all tax, interest including interest under section 220, penalty and other sums relating to the offence, and be accompanied by an undertaking to pay the compounding charges and to withdraw related appeals. A non-refundable application fee is payable - Rs. 25,000 for a single application and Rs. 50,000 for a consolidated one - adjustable only against the compounding charges for that application. In an offence by a company or a Hindu undivided family, the main accused or a co-accused may apply separately or jointly, and payment by any one of them results in the offence being compounded for the main accused and all co-accused; no separate fee is payable for a co-accused. Compounding is not a matter of right and may be refused in exceptional cases by a written reasoned order, for instance where the applicant is a habitual offender or on the gravity of the offence.
TaxSphere, “CBDT Compounding Guidelines 2024”, https://taxnotice.vittsphere.com/caselaw/case/cbdt-compounding-guidelines-2024/ (validity last checked 2026-08-19)
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My s.276B prosecution for late deposit of TDS is pending and the CBDT has issued fresh compounding guidelines dated 17 October 2024. Will the High Court still quash the complaint under s.482 CrPC?
My prosecution sanction under s.279(1) was signed by the Principal Director of Income Tax (Investigation), not the Principal Commissioner. Is the sanction bad, and can I say the complaint is premature because no assessment has been made?
I deposited the TDS late but with interest, and years later the department filed a criminal complaint under s.276B. Can I get it quashed?
I filed my return late. When is the 276CC offence committed, and is it still a first offence?
