Sebi Proposes Waiver Procedure for Recovery Interest

The Securities and Exchange Board of India (Sebi) has proposed a procedure for waiving or reducing interest in recovery proceedings for unpaid penalties. The process involves specific criteria under Section 220(2A) of the Income Tax Act, 1961, and requires applications to be submitted to the relevant Recovery Officer. Sebi seeks public comments until December 2.

The Securities and Exchange Board of India (Sebi) on Monday unveiled a proposal aimed at establishing a procedure for the waiver or reduction of interest in recovery proceedings linked to unpaid penalties.

According to the proposal, applicants must submit their waiver or reduction requests to the concerned Recovery Officer, backed by documentation demonstrating the fulfillment of three criteria outlined in Section 220(2A) of the Income Tax Act, 1961. These criteria stipulate that repayment must pose genuine hardship to the applicant, the default was due to circumstances beyond their control, and cooperation was extended during any related inquiry.

Sebi emphasized that applications will only be considered if the demand notice has already been served and the principal amount is fully paid. The Recovery Officer is tasked with forwarding applications to the Competent Authority, which must reach a decision within 12 months. Pending applications will be resolved within this timeframe, and rejected applicants will be granted an opportunity to present their case. Sebi has invited public feedback on these proposals until December 2.

(With inputs from agencies.)