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Section 275 of the Income-tax Act, 1961 specifies the time limit for imposing penalties. Prior to the Finance Bill 2025, different time limits existed for penalty imposition under various provisions. However, the Finance Bill 2025 has amended section 275 to clarify that any order imposing a penalty under Chapter XXI cannot be passed after six months from the end of the quarter in which the related proceedings are completed. This change standardizes the time limit for penalty imposition, providing a clear, single deadline.

FAQs Budget 2025: Time limit to impose penalties rationalized

Q.1 What is section 275 of the Income-tax Act, 1961?

Ans. Section 275 of the Income-tax Act, 1961 provide for the bar of limitation for imposing penalties.

Q.2 What amendment has been made in section 275 of the Income-tax Act, 1961 in Finance Bill 2025?

Ans. Section 275 has been amended to provide that any order imposing a penalty under Chapter XXI shall not be passed after the expiry of six months from the end of the quarter in which the connected proceedings are completed.

Prior to Finance Bill 2025, there were multiple time-limits to impose penalties. Thus, this amendment has brought clarity on the time-limits to impose penalty and has provided single time-limit to impose penalties.

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