Circular No. 13 /2025

Order under section 119 of tbe Income-tax Act, 1961 for waiver of interest payable under section 220(2) due to late payment of demand, in certain cases

What this is

Circular No. 13 /2025 was issued by the Central Board of Direct Taxes on 19 September 2025. Its subject is Order under section 119 of tbe Income-tax Act, 1961 for waiver of interest payable under section 220(2) due to late payment of demand, in certain cases.

This is an order under section 119 of the 1961 Act — section 239 of the 2025 Act. Section 119 lets the Board give directions to its own officers and, in defined cases, relax a requirement. It is an administrative power, not a power to rewrite the charge.

What it does

Waives interest under section 220(2) for taxpayers whose returns were rectified to withdraw a section 87A rebate that the processing system had wrongly allowed against income taxable at the special rates in Chapter XII. The Board's position is that because section 115BAC(1A) is subject to the other provisions of Chapter XII, special-rate income is left out in working out the tax under section 115BAC(1A), and clause (b) of the proviso to section 87A applies to income charged under that sub-section; so the rebate given on special-rate income has to come out by rectification, which throws up a demand. Interest under section 220(2) on that demand is waived where the demand is paid on or before 31 December 2025. If it is not paid by then, interest runs under section 220(2) from the day after the section 220(1) period expires.

Why it was issued

Rebate under section 87A had been allowed at processing on incomes chargeable at special rates; the rectifications correcting that were raising demands, and delay in paying them attracted interest under section 220(2) — a genuine hardship the Board moved to mitigate under section 119.

Who it reaches

Individuals taxed under section 115BAC(1A) who were allowed a section 87A rebate against special-rate income
Taxpayers with capital gains or other Chapter XII income who received a CPC rectification order withdrawing that rebate
Taxpayers holding a demand notice flowing from such a rectification

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.87	s.155
s.87A	s.156
s.115BAC	s.202
s.119	s.239
s.220	s.411

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it.

Circular No. 13 /2025 F. No. 275/0912025-IT(Budget) Governmen t ofIndia/(1-fRO "':en{""'q;"'"1 (") Ministry of Finance! (fittr l4;tictll) Department of Revenue/~ ~ Central Board of Direct Taxes/(~-snll Vt'll"alq;xoi\ij New Delhi. I 11'September, 2025 Subject: Order under section 119 of tbe Income-tax Act, 1961 for waiver of interest payable under section 220(2) due to late payment of demand, in certain cases - reg. The provisions of section 115BAC(1 A) of the Income-tax Act, 1961 ('the Act') are subject to the other provisions of Chapter XII of the Act. Therefore, incomes chargeable to tax at special rates as specified under various provisions of Chapter XII of the Act are not included while determining the chargeability to tax under section 115BAC(1 A) of the Act. Further, the clause (b) of proviso to section 87A is applicable to incomes chargeable to tax under section 115BAC(1 A) of the Act. 2. It is noticed that in certain cases, the returns had already been processed and rebate was allowed under section 87 A of the Act on incomes chargeable to tax at special rates. In such cases, rectifications havc to be carried out to disallow such rebate, which has been incorrectly allowed. Such rectifications will result in demands getting raised. If the payments of such demands raised are delayed then the same are liable for charging of interest under section 220(2) of the Act. 3. In order to mitigate the genuine hardship arising to such taxpayers on account of interest payable under section 220(2) of the Act, the Central Board of Direct Taxes ('the Board'), in exercise of its powers conferred under section 119 of the Act, directs that "the interest payable under section 220(2) of the Act shall be waived in such cases where the payment of the demands raised, is made on or before 31.12.2025." 4. In such cases, if a taxpayer fails to pay the demand raised as a result of rectification order passed by the CPC on or before 31.12.2025, the interest shall be charged under section 220(2) of the Act from the day immediately following the end of the period mentioned in subsection (I) of section 220 of the Act. 5. Hindi version shall follow. -f?~ . (Rajendra Kumar Meena) Under Secretary, IT-Budget CBDT Copy to:- 1. The Chainnan & Members, CBDT 2. All Pr.CCsIT, CCsITI DGsIT. 3. All Joint Secretaries/CslT, CBDT. 4. Commissioner oflncome-tax (Media & TP) and official Spokesperson, CBDT, New Delhi. 5. ADG (PR, P&P) for necessary action. 6. JClT, Database Cell, with a request to upload the order on the website ww.irsofficersonIine.gov.in. 7. Web Manager, % DGIT(Systems) with request to upload on the departmental website of www.incometaxindia.gov.in. 8. The Institute of Chartered Accountants of India, LP Estate, New Delhi 9. All Chambers of Commerce. 10. Hindi Cell for translation. II. The Guard File. (Rajendra Kumar Meena) Under Secretary, IT-Budget CBDT

What to watch

The waiver was conditional on paying the demand by 31 December 2025; that date has passed, so the relief is spent and interest runs in the ordinary way on demands not paid in time.
Only interest under section 220(2) is waived — the tax withdrawn by the rectification itself was always payable.
Where the demand went unpaid, the circular directs that interest is charged from the day immediately after the section 220(1) period ends, not from the date of the rectification order.
The relief attaches to this class of rectification alone; it does not cover section 220(2) interest on demands raised on any other ground.

Where you meet it

On a CPC rectification order withdrawing a section 87A rebate, and on the demand notice and section 220(2) interest computation that follows it.

What it names

It mentions. Circular No. 13/2025

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 20/2020 — Income tax deduction from salaries during the financial year 2020 21 under section 192 of the income tax act 1961 3 December 2020
Notification No. 41/2019 [F.No.370142/5/2019-TPL]/GSR 375(E) — Ministry of Finance 22 May 2019
Circular No. 1/2017 — Government of INDIA 2 January 2017
Circular No. 4/2023 — Clarification regarding deduction of TDS under section 192 read with sub-section (1A) of section 115BAC of the Income-ta 5 April 2023
Notification No 38/2020 [F. No. 370142/15/2020-TPL] / GSR 415(E) — (Central Board of Direct Taxes) 26 June 2020

← Circular No. 14/2025 · Circular No. 12/2025 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.