CBDT Revises Form 161 For Penalty Waiver on October 8: Key Changes Taxpayers Should Know:

The Central Board of Direct Taxes (CBDT) of the Ministry of Finance has amended the Income-tax Rules, 2026 to allow the taxpayers to apply for waiver of penalty under Section 440(2) of the Income-tax Act, 2025. The changes were notified on 8th October, 2026 vide Income-tax (Sixth Amendment) Rules, 2026 and will come into force from the date of its publication in the Official Gazette.

The CBDT has amended Rule 231 and a new format for applications seeking waiver of penalty has replaced Form No. 161 as part of the amendment. The revised form requires taxpayers to provide personal details, including their name, Permanent Account Number (PAN), address and contact information, along with details of the relevant assessment or reassessment order.

Applicants must also provide information such as the tax year, the section under which the order was issued, the Document Identification Number (DIN), the dates of the order and its service, the payment due date, assessed income and under-reported income. The form also requires details of the tax and interest payable, additional income-tax applicable in lieu of the penalty, the total amount payable and payments already made.

The revised form sets out additional income-tax calculations based on the nature of the under-reported income. The amount is calculated at 100% of the applicable tax on under-reported income in specified cases under Section 439(11)(a) to (f), and at 120% in cases covered by Section 439(11)(g). The total amount payable for seeking a waiver is calculated by adding the tax and interest payable on the assessed income to the applicable additional income-tax.

Applicants must also submit a declaration confirming that the information provided is correct and that no appeal has been filed against the relevant assessment or reassessment order. They must further undertake not to file an appeal before the expiry of the period specified under Section 440(5) of the Act.

The amendment provides a revised format for taxpayers seeking a waiver of penalty and specifies the information and declarations required to process such applications.