The revised compounding guidelines for tax offenses provide ...

New Tax Offense Compounding Guidelines: No Limitation Period, Payment Extensions Up to 24 Months, and Progressive Fee Structure

March 18, 2025

Circulars     Income Tax

The revised compounding guidelines for tax offenses provide significant procedural updates regarding application eligibility and processing. Applications pending as of October 17, 2024 will be processed under the new guidelines without requiring fresh submissions or fees. The limitation period for applications has been eliminated, allowing previously rejected applications to be refiled as subsequent applications. Co-accused may apply separately or jointly, with no separate fees required. Payment extensions up to 24 months are permitted. Compounding charges are determined by application sequence and offense type, with subsequent applications for the same offense incurring higher rates (1.2x, 1.4x, etc.). Applications filed more than 12 months after prosecution launch face a 50% surcharge. The guidelines also address cases involving convicted persons and those under investigation by other agencies.

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