Section 279(2) → Section 395
Compounding of offenses
Quick Answer
Section 279(2) of the Income Tax Act, 1961 (Compounding of offenses) corresponds to Section 395 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 279(2)
The starting point is Section 279(2) of the Income Tax Act, 1961 — compounding of offenses. Allows a taxpayer to pay a 'Compounding Fee' to avoid jail/prosecution.
Under the Income-tax Act, 2025 (effective 1st April 2026), Section 279(2) is retained and renumbered as Section 395 of the Income-tax Act, 2025. Retained and Encouraged. The department's policy is to 'Compound' (settle) most first-time offenses for a fee.
The transition impact on Section 279(2) is assessed as High. The ultimate 'get out of jail' card for taxpayers.
Sec 279(2)
Provision Summary
Allows a taxpayer to pay a 'Compounding Fee' to avoid jail/prosecution.
Sec 395
Provision Summary
Retained and Encouraged. The department's policy is to 'Compound' (settle) most first-time offenses for a fee.
Key Changes & Highlights
- Compounding application must be filed within specified months from the first notice.
Frequently Asked Questions
Which subject does Section 279(2) of the 1961 Act cover?
Section 279(2) of the Income Tax Act, 1961 covers compounding of offenses. Allows a taxpayer to pay a 'Compounding Fee' to avoid jail/prosecution.
What is the new section number for Section 279(2) under the Income-tax Act, 2025?
Section 279(2) of the Income Tax Act, 1961 maps to Section 395 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Retained and Encouraged. The department's policy is to 'Compound' (settle) most first-time offenses for a fee.
How does the Income-tax Act, 2025 affect Section 279(2) in practice?
The transition impact for Section 279(2) is rated High. The ultimate 'get out of jail' card for taxpayers.
What is new about Section 279(2) under the Income-tax Act, 2025?
Compounding application must be filed within specified months from the first notice. These points are specific to Section 279(2) (Compounding of offenses).
Disclaimer: This mapping of Section 279(2) (Compounding of offenses) to Section 395 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 279(2) is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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