Form 161 Updated: Income-tax Penalty Waiver Rules in October 2026

CBDT has updated Rule 231 and Form No. 161 through Notification 134/2026, G.S.R. 871(E), dated 8 October 2026. The Income-tax (Sixth Amendment) Rules, 2026 take effect on publication in the Official Gazette. The change concerns applications under section 440 of the Income-tax Act, 2025.

What the notification changes

The notification makes two changes:

• It inserts “or waiver” after “imposition” in Rule 231.
• It replaces Form No. 161 with a form titled an application for seeking waiver of penalty under section 440(2).

The notification updates this procedure and form. The conditions for relief remain in section 440; filing the form does not automatically grant a waiver. Read the official notification.

What the new Form 161 asks for

Part A collects the applicant's name, PAN, address and contact details. Part B records the tax year, relevant assessment or reassessment order, its document identification number, order and service dates, and the payment due date in the demand notice.

It then separates assessed income and under-reported income, tax and interest, any applicable additional income-tax, and payment details such as BSR code, deposit date, challan serial number and amount. Reconcile these entries with the order and computation sheet before applying.

The 100% and 120% fields need the correct tax base

The replacement form reflects section 440's additional-tax requirements for specified misreporting cases. For the circumstances in section 439(11)(a) to (f), the additional component is 100% of the tax payable on under-reported income; for section 439(11)(g), it is 120%. These are not percentages of the entire assessed income. The misreporting circumstances themselves are listed in section 439.

For example, if the relevant tax on under-reported income is ₹50,000, the corresponding additional component is ₹50,000 at 100%, or ₹60,000 at 120%. Those components do not represent the whole demand or establish eligibility on their own. The October notification does not independently create these section 440 rates; it supplies the updated form. Check the current official Act.

Keep payment and application deadlines separate

Section 440 requires the relevant payments within the period specified in the notice of demand. Its application period is one month from the end of the month in which the relevant order is received. An application deadline does not extend an earlier demand-payment deadline.

The statutory no-appeal condition and restriction where Chapter XXII proceedings have already been initiated also need checking. The form's verification includes a no-appeal declaration and an undertaking linked to the section 440(5) period. Do not sign a declaration inconsistent with the actual case history.

Checklist before applying

• Use the substituted Form 161 and read its notes.
• Check the relevant order, service date, demand deadline and eligibility under section 440.
• Reconcile tax, interest, applicable additional tax and every challan.
• Review existing appeals or proceedings and the consequences of choosing this route.
• Confirm current official filing instructions and retain the submission acknowledgment.

This article provides general information about the notified change. If you have received a penalty order or notice, see our income tax notice reply service. For advice on your order, payment calculation or application, contact Bizeneed. Refer to the official Act, applicable Finance Act amendments and the current notification when making a filing decision.