The Central Board of Direct Taxes (CBDT) has introduced a revised Form 161 for applications seeking waiver of penalty under Section 440(2) of the Income Tax Act, 2025. The amendment, notified through Notification No. 134/2026 dated 8 October 2026, updates the prescribed application framework under the Income-tax Rules, 2026.

The revised form provides a formal mechanism for eligible taxpayers to request penalty relief under the specified statutory provisions. However, filing an application does not automatically result in waiver of the penalty.

Why Does This Matter to Businesses?

Businesses facing income-tax penalty proceedings should examine whether they satisfy the statutory conditions for seeking relief before deciding how to respond.

A proper review should include the nature of the penalty, the relevant assessment proceedings, applicable eligibility conditions and supporting documents.

Importantly, the availability of a prescribed application form does not mean that every income-tax penalty can be waived. The relief is subject to the requirements of the relevant provision and consideration by the competent tax authority.

Businesses should therefore evaluate the available legal remedies carefully and ensure that any application is supported by accurate facts and relevant documentation.

Mardia Global | Tax & Accounting Insights for Businesses in India