The Central Board of Direct Taxes (CBDT), under the Ministry of Finance, has issued Notification No. 134/2026, dated October 8, 2026 [G.S.R. 871(E)], notifying the Income-tax (Sixth Amendment) Rules, 2026, to amend Rule 231 and substitute Form No. 161 under the Income-tax Rules, 2026. The amendment introduces a revised application form for seeking waiver of penalty under Section 440(2) of the Income-tax Act, 2025, incorporating provisions relating to under-reported income, misreporting and payment of additional income-tax in lieu of penalty.
The notification has been issued in exercise of the powers conferred under Section 533 read with Section 440 of the Income-tax Act, 2025. Under the amendment, the words “or waiver” have been inserted after the word “imposition” in Rule 231 of the Income-tax Rules, 2026, thereby expressly incorporating waiver within the scope of the said rule.
Further, the CBDT has substituted the existing Form No. 161 with a revised form titled “Application for seeking waiver of penalty under section 440(2) of the Income-tax Act, 2025.” The revised form requires taxpayers to furnish personal information, Permanent Account Number (PAN), contact details, particulars of the assessment or reassessment order, Document Identification Number (DIN), relevant tax year, assessed income, under-reported income and details of tax and interest payable.
An important feature of the revised Form No. 161 is the separate disclosure of under-reported income arising from misreporting under Section 439(11)(a) to (f), misreporting under Section 439(11)(g), and under-reporting not arising from misreporting. This classification enables the determination of the applicable additional income-tax payable for seeking waiver of penalty under the prescribed statutory framework.
The revised form specifically provides for additional income-tax in lieu of penalty at 100% of the tax payable on under-reported income covered under Section 439(11)(a) to (f), and 120% of the tax payable on under-reported income covered under Section 439(11)(g). The total amount payable for waiver of penalty is calculated by adding the tax and interest payable on assessed income and the applicable additional income-tax. The form also requires particulars of payments made, including BSR Code, date of deposit, challan serial number and amount paid.
The CBDT has further prescribed a specific verification and declaration in the revised form, requiring the applicant to confirm that no appeal has been filed against the relevant assessment or reassessment order. The applicant must also undertake that no appeal shall be filed against such order before the expiry of the period specified under Section 440(5) of the Income-tax Act, 2025.
Additionally, the revised form clarifies that the total amount payable for waiver of penalty must be paid within the due date specified in the notice of demand. The accompanying instructions also provide that certain information may be pre-filled to the extent possible, facilitating submission of the prescribed application.
The Income-tax (Sixth Amendment) Rules, 2026 have come into force from the date of publication in the Official Gazette, i.e., October 8, 2026. The amendment provides a structured application and disclosure mechanism for taxpayers seeking waiver of penalty under Section 440 of the Income-tax Act, 2025, subject to fulfilment of the prescribed statutory requirements.
The key takeaway is that the CBDT has introduced a revised Form No. 161 for seeking waiver of penalty, with specific disclosure requirements, additional income-tax calculations at 100% and 120% for prescribed categories of misreporting, payment particulars and declarations concerning non-filing of appeals. Taxpayers and tax professionals should carefully examine the revised form and the applicable statutory conditions before submitting an application for waiver.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/10/Amendment-of-the-Income-tax-Form-No.-161-in-consequence-to-Finance-Act-2026.pdf
