The Central Board of Direct Taxes (CBDT) has revised Form 161 under the Income-tax Sixth Amendment Rules, 2026, notified on October 8, 2026. The amendment changes the procedure for taxpayers seeking relief from penalties related to under-reporting or misreporting of income.
Under the revised rules, the words “or Waiver” have been added alongside “Imposition” in Rule 231 of the Income Tax Rules. The earlier version of Form 161 has also been replaced with an updated format that requires more detailed information about previous penalty orders and additional income tax payments.
The changes are intended to provide a formal procedure for requesting a penalty waiver in eligible cases, including situations where a penalty order has already been issued.
What Has Changed in Income Tax Form 161?
Under the Income Tax Act, 2025, Form 161 is used in cases involving penalties arising from under-reporting or misreporting of income identified during an assessment or reassessment.
Previously, Rule 231 primarily addressed protection against the imposition of a penalty. The latest amendment introduces the concept of a penalty waiver into the rule and updates the application form accordingly.
The revised form requires applicants to provide details of any existing penalty order and evidence of additional income tax paid as part of their request. Taxpayers should therefore review the updated requirements carefully before submitting an application.
Understanding Sections 533 and 440 and Rule 231
The relevant legal provisions serve different purposes within the revised framework.
Section 533 provides the authority to frame rules and prescribe forms and procedures under the Income Tax Act, 2025.
Section 440 deals with the authority of the Assessing Officer (AO) to grant relief from penalties relating to under-reporting or misreporting of income and provide exemption from legal proceedings, subject to the applicable conditions.
Rule 231 and Form 161 set out the procedure for applying for relief, including the information and supporting documents required to process the request.
Together, these provisions establish the legal and procedural framework for eligible taxpayers seeking relief from penalties.
Who Can Apply for an Income Tax Penalty Waiver?
Taxpayers facing a penalty under Section 439 may apply through Form 161 if they meet the prescribed conditions. These include the following requirements:
- Payment of tax and interest: The full amount of tax and interest demanded in the assessment order must be paid within the deadline specified in the notice.
- Payment of additional income tax: Applicants must pay the prescribed additional tax in place of the penalty. According to the information provided, this amount may range from 100% to 120% of the relevant tax in certain cases.
- No appeal against the assessment order: The taxpayer must not have filed an appeal against the assessment order and must undertake not to file one in the future.
- No criminal prosecution: The relief will not be available if criminal prosecution has already been initiated under Chapter XXII.
Meeting these conditions does not remove the need to follow the prescribed application procedure. Applicants should ensure that their tax payments, declarations and supporting documents are complete.
Form 161 Filing Deadline and Decision Timeline
Eligible taxpayers must submit Form 161 within one month from the end of the month in which they receive the assessment or reassessment order.
After receiving the application, the Assessing Officer is required to issue a decision within three months from the end of the month in which the application was received.
The application cannot be rejected without giving the taxpayer an opportunity to be heard. This requirement allows applicants to present their explanation before a decision is made.
Taxpayers considering a penalty-waiver request should review the applicable provisions, check the filing deadline and confirm the latest Form 161 requirements before applying.
Disclaimer
This article is intended for general informational purposes and is based on the details provided about the reported Income-tax Sixth Amendment Rules, 2026. Tax laws, eligibility requirements and application procedures may be subject to specific conditions or subsequent changes. Readers should consult the official CBDT notification, the applicable provisions of the Income Tax Act, 2025, or a qualified tax professional before making decisions or submitting Form 161.