The Central Board of Direct Taxes (CBDT) has notified the Income-tax (Sixth Amendment) Rules, 2026, amending Rule 231 and replacing Form No. 161, which is used to seek waiver of penalty under Section 440(2) of the Income-tax Act, 2025.
The revised form requires taxpayers to disclose assessment details, classify under-reported income, calculate additional income-tax payable in lieu of penalty, and provide evidence of payment. It also requires a declaration that no appeal has been filed against the relevant assessment or reassessment order, along with an undertaking concerning the filing of an appeal during the period specified in Section 440(5).
The amendment was issued through Notification No. 134/2026, dated October 8, 2026, bearing Gazette reference G.S.R. 871(E). The rules come into force on the date of their publication in the Official Gazette.
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Rule 231 Amended To Expressly Cover Waiver
The notification inserts the words “or waiver” after the word “imposition” in Rule 231 of the Income-tax Rules, 2026.
Alongside this change, the CBDT has substituted Form No. 161 with a revised application titled “Application for seeking waiver of penalty under section 440(2) of the Income-tax Act, 2025.”
The notification has been issued in exercise of the powers conferred by Section 533, read with Section 440, of the Income-tax Act, 2025. Its operative changes concern the rule and the prescribed application form; entitlement to waiver remains governed by the relevant statutory provisions.
Separate Disclosure Of Under-Reported And Misreported Income
The revised form divides the application into personal information and details of the assessment or reassessment order and payments.
Applicants must furnish their name, Permanent Account Number, address, mobile number and email address. They must also disclose the tax year, the section under which the order was passed, its Document Identification Number (DIN), the date of the order and the date on which it was served.
A significant feature of the revised form is the separate classification of under-reported income. It distinguishes income under-reported in consequence of misreporting under Section 439(11)(a) to (f), income falling under Section 439(11)(g), and under-reported income that is not a consequence of misreporting.
This classification is relevant to the additional tax calculation prescribed in the form.
Additional Tax At 100% And 120%
For under-reported income arising from misreporting under Section 439(11)(a) to (f), the revised form specifies additional income-tax equal to 100% of the tax payable on that income.
For income falling under Section 439(11)(g), it specifies additional income-tax equal to 120% of the tax payable on that income.
These percentages apply to the tax payable on the relevant under-reported income, rather than to the income amount itself. The form directs applicants to calculate that tax with reference to Section 439(12).
Applicants must then aggregate the two components to determine the total additional income-tax payable in lieu of penalty.
Tax, Interest And Additional Tax Must Be Disclosed
The revised form requires disclosure of the tax and interest payable on assessed income, with reference to the computation sheet accompanying the notice of demand.
The total amount payable for seeking waiver is calculated by adding this tax and interest to the additional income-tax computed under the prescribed categories.
The form expressly records the due date for payment under the notice of demand. Its explanatory note states that the total amount payable for waiver must be paid within that due date.
Applicants must provide payment particulars, including the BSR code, date of deposit, challan serial number and amount paid. The form permits additional payment entries where required.
Declaration On Appeals Forms Part Of The Application
The verification accompanying Form No. 161 requires the applicant to declare that no appeal has been filed in respect of the assessment or reassessment order identified in the application.
It also requires an undertaking that no appeal will be filed against that order before the expiry of the period specified in Section 440(5).
The applicant must confirm that the information furnished is true to the best of their information and belief, specify the capacity in which the application is being made, and declare competence to file and verify it.
The notification does not reproduce the duration of the period under Section 440(5); the revised form incorporates that requirement by reference.
Pre-Filled Information And Rupee Reporting
The explanatory notes state that information in the form will be pre-filled to the extent possible. All monetary amounts must be reported in rupees unless otherwise specified.
Individuals must provide their first, middle and last names in full without abbreviations. Other applicants must also furnish their full names.
The address fields cover country or region, building details, street, PIN or ZIP code, post office, locality, district and state. Applicants may additionally provide a DIGIPIN.
The amendment makes Form No. 161 more specific about the information needed for a penalty waiver application, particularly the classification of misreported income, calculation of additional tax, timely payment and declarations relating to appeals. Filing the form does not, by itself, establish that waiver has been granted.
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