To facilitate Ease of Doing Business and decriminalisation of offences, the Income Tax department today said it has relaxed several norm related to compounding of offences under the I-T Act. The I-T department said it has allowed compounding in cases where the applicant has been sentenced to up to two years of imprisonment. Compounding allows the person to accept his offence and pay specified charges to avoid prosecution.

Issuing the revised guidelines for Compounding of offences under the Income-tax Act, 1961, the Central Board of Direct Taxes (CBDT) said: "The scope of eligibility for compounding of cases has been relaxed whereby case of an applicant who has been convicted with imprisonment for less than 2 years being previously non-compoundable, has now been made compoundable."