It was observed that in some instances, taxpayers were incorrectly granted rebate under section 87A on incomes chargeable to special tax rates under Chapter XII while opting for section 115BAC(1A). Subsequent rectifications to disallow such rebates resulted in additional demands being raised. Normally, any delay in paying these demands attracts interest under section 220(2). To reduce hardship for affected taxpayers, the CBDT has directed that such interest will be waived if the demand raised through rectification is paid on or before 31 December 2025. However, if the payment is not made by this date, interest under section 220(2) will apply from the day after the period allowed under section 220(1).
(Link: Income Tax Circular 13/2025, Press Release Dated 19/09/2025)