CBDT Revises Form 161 for Penalty Waiver Under Section 440 of the Income-tax Act, 2025

The Central Board of Direct Taxes (CBDT) has notified a revised Form 161 for taxpayers seeking waiver of penalty under the Income-tax Act, 2025. Notification No. 134/2026 dated 8 October 2026 issues the Income-tax (Sixth Amendment) Rules, 2026. It amends Rule 231 of the Income-tax Rules, 2026 by inserting the words "or waiver" after "imposition", and substitutes Form No. 161 with a new "Application for seeking waiver of penalty under section 440(2) of the Income-tax Act, 2025". The amendment came into force on its publication in the Official Gazette.

What has changed in Form 161

The revised form separates under-reported income into two buckets: under-reporting in consequence of misreporting under Section 439(11), and under-reporting not in consequence of misreporting. Misreporting is further split between clauses (a) to (f) and clause (g) of Section 439(11). The form then computes an "additional income-tax payable (in lieu of penalty)" on the misreporting portion, so a taxpayer in a misreporting case can also seek a waiver of penalty by paying this additional tax.

Total amount payable to get the penalty waived

Under Serial No. 16 of the form, the total amount payable for waiver is the tax and interest payable on the assessed income (as per the computation sheet with the notice of demand) plus the total additional income-tax computed above. Note 3 of the form requires this amount to be paid within the due date for payment shown in the notice of demand. Challan details (BSR code, date of deposit, challan serial number and amount) must be entered in the form.

Details required in the revised Form 161

• Part A: name in full without abbreviations, PAN, address (DIGIPIN may also be given), mobile number and email ID.
• Part B: tax year, section under which the assessment or reassessment order was passed, DIN of the order, date of the order and date of its service.
• Due date for payment as per the notice of demand, income assessed and under-reported income split by category.
• Tax payable on under-reported income (with reference to Section 439(12)) and the additional income-tax in lieu of penalty.
• Verification that no appeal has been filed against the order, an undertaking that no appeal will be filed before the period specified in Section 440(5) expires, and the capacity in which the applicant signs.

The notes to the form state that some information will be pre-filled to the extent possible, and that all amounts are to be given in rupees.

What this means for taxpayers and CA firms

• Check every assessment or reassessment order passed under the 2025 Act for the under-reported and misreported amounts before the demand due date.
• Compare the cost of the waiver (tax, interest and 100%/120% additional tax) with the merits and cost of filing an appeal; choosing the waiver means giving up the appeal.
• Pay the full amount within the due date in the notice of demand, since the form ties the waiver to that date.
• Keep the challan details ready, as they form part of the application.

Firms handling a large number of assessment orders and demand notices can track due dates, DINs and response timelines across clients using NoticeCPC.