An income tax penalty can run into a substantial amount, especially in cases involving misreporting of income. But taxpayers may have a way to seek relief.
The Central Board of Direct Taxes has revised Form 161 to bring cases of misreporting within the scope of the penalty waiver process, subject to specified conditions.
The amendment, notified on October 8, 2026, aligns the form with the provisions of the Income-tax Act, 2025.
Who can apply for this relief, how much additional tax must be paid, and what is the deadline for filing Form 161? Here is what taxpayers need to know.
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What is Form 161?
Form 161 is a form prescribed under section 440(2) of the Income-tax Act, 2025. This form can be filed by a taxpayer (individual, company, LLP, trust, etc.) to seek immunity from the imposition of penalties under section 439 and the commencement of prosecution under sections 478 or 479 in cases of underreporting or misreporting income, subject to the fulfillment of specified conditions, following receipt of an assessment or reassessment order.
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According to the Income Tax Department, Form 161 must be filed within one month after the end of the month in which the assessment or reassessment order is received pursuant to section 440 of the Income-tax Act, 2025.
“The purpose of Form 161 is to enable a taxpayer who accepts the assessment or reassessment order, pays the entire tax and interest demand within the prescribed time, and does not file an appeal, to seek immunity from penalty under section 439 and prosecution proceedings under section 478 or section 479 of the Income-tax Act, 2025,” the Income Tax Department has clarified.
Under the scheme, a taxpayer may accept the assessment, pay the tax, interest and any applicable additional tax, and forgo the right to appeal; in return, the tax authority may waive the section 439 penalty and refrain from initiating prosecution proceedings.
The Income Tax Department states that Form 161 is optional and should only be submitted if the taxpayer wants to ask for immunity after paying the demand in full and opting not to file an appeal.
The principal benefits are certainty, reduced litigation risk and potentially lower overall cost compared with protracted appeals.
Who should file Form 161?
Any assessee i.e. individual, company, LLP, trust, firm, etc. may file Form 161 if they have received an assessment or reassessment order under the Income-tax Act, 2025, have paid the full amount of tax and interest payable in accordance with the notice of demand, have not filed an appeal against the order and have agreed not to do so before the time frame outlined in section 440(5), and wish to apply for immunity from penalty under section 439 and prosecution under section 478 or 479.
As per the Income Tax Department, the application must be made within 30 days from the end of the month in which the order referred to in section 440(1)(a) is received.
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What are the revisions in Form 161?
The CBDT has replaced Form 161 with a new form titled “Application for seeking waiver of penalty under section 440(2) of the Income-tax Act, 2025”.
It has also amended Rule 231 so that it expressly covers “waiver”. The new form requires under-reported income to be reported in 3 (three) separate categories:
- misreporting under section 439(11)(a) to (f)
- misreporting under section 439(11)(g)
- under-reporting that does not arise from misreporting
It also calculates the additional income tax payable in place of a penalty.
This is 100% of the tax for the first category and 120% for the second. The form now uses “Tax Year” instead of “Assessment Year”.
| Challenges in Old Form 161 (1961) | Solutions in Finalised Form 161 (2025) |
| Limited taxpayer identification fields | Structured personal and contact information |
| Ambiguity in appeal waiver declaration | Standardised verification aligned with section 440(5) |
| Manual, unstructured payment reporting | Repeatable, system-validated challan reporting |
Source: Income Tax Department
Key changes made across Form 161
As per the official website of the Income Tax Department, here are the common changes made in Form 161 under section 440(2) of the Income-tax Act, 2025.
Statutory Alignment
Old Form: Section 270AA(2) of the Income-tax Act, 1961.
New Form: Section 440(2) of the Income-tax Act, 2025.
Verification declaration updated to align with section 440(5).
Penalty and prosecution references updated from older sections to section 439 (penalty) and sections 478/479 (prosecution).
Terminology Update
“Assessment Year” replaced with Tax Year throughout.
Currency notation standardized to ₹.
Structure & Format
Form divided into Part A (Personal Information) and Part B (Details of Orders and Payments).
Father’s/Husband’s name field added in Part A.
Mobile number and email fields are repeatable, allowing multiple contacts.
BSR/Challan payment details are repeatable, accommodating multiple payments.
Enhanced Identity Capture
Structured fields for Full Name, PAN, Father’s/Husband’s Name, Address, Mobile, Email.
Mandatory PAN for submission.
Aadhaar fields not mandatory but may be integrated if available.
Payment Reporting
Previously, payments were reported as simple tables; now detailed BSR Code, Challan serial number, date, and amount with repeatable rows.
Supports multiple instalments.
Verification Section
Old form: Ambiguous self-declaration.
New form: Clear statutory verification declaration, specifying no appeal has been filed and none will be filed under section 440(5).
Requires signature, name, designation (if applicable), place, and date.
Filing and Process
Old form: Manual or offline submission.
New form: Mandatory e-filing through the Income-tax portal.
Reasons for getting an income tax penalty
Section 439 imposes a penalty for under-reporting income.
The penalty is 50% of the tax for under-reporting, which includes errors and differences in interpretation.
The amount of penalty leviable rises to 200% for misreporting.
Misreporting includes suppressing facts, false entries in the books, unrecorded receipts or investments, and claiming expenses without evidence, etc.
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How to apply for an income tax waiver using Form 161?
The application is filed online on the income tax portal. The taxpayer enters:
- details of the assessment order and the notice of demand
- the under-reported income, split into the 3 (three) categories
- the tax, interest and additional tax calculated
- details of the payments made
In the declaration, the taxpayer confirms that the information is true and correct, that no appeal has been filed, and that no appeal will be filed within the period set out in section 440(5). The form must be verified by the taxpayer or a person authorised to sign.
An acknowledgment number is generated upon Form 161 submission. In the e-Filing portal, under e-File → Income Tax Forms → View Filed Forms, the taxpayer can track the status (Submitted / Under Processing / Accepted / Rejected). The acceptance or rejection order will be issued to the registered email address and mobile number, in addition to being informed electronically via the portal to the respective taxpayer.
Documents required
As per the Income Tax Department, the following details/documents are required while filing Form 161:
- Assessment or reassessment order details;
- Notice of demand details (amount, due date);
- Proof of payment of tax and interest (BSR Code, challan serial number, date, amount);
- Permanent Account Number (PAN) of the applicant.
What are the deadlines to file Form 161?
Relevant deadlines are:
Filing Form 161: within 1 (one) month from the end of the month in which the order is received, in accordance with the provisions of section 440 of the Income-tax Act, 2025.
Paying the dues: by the due date in the notice of demand
Assessing Officer’s decision: the officer must accept or reject the application within 3 (three) months from the end of the month in which it is received.
What was the earlier process which the CBDT amended on October 8?
“Under the Income-tax Act, 1961, this relief was available under section 270AA, read with Rule 129 and Form 68. It covered only under-reporting and was not available for misreporting. The Finance Act, 2026 extended section 440 benefit to misreporting cases, provided the additional tax is paid,” said Ashish Mehta, Partner at Khaitan & Co.
However, the earlier Form 161 still excluded misreporting cases.
The amendment notified on 8 October 2026 brings the form and Rule 231 into line with the amended section 440, so taxpayers facing misreporting penalties can now use this route.
Disclaimer: This article is for informational purposes only and should not be construed as investment, financial, tax, or legal advice. Any illustrations, examples, or return projections used in this article are for explanatory purposes only and do not guarantee actual investment outcomes. The views and opinions expressed by experts quoted in this article are their own and should not be considered investment recommendations. Readers should consult a qualified professional before making any financial decisions.
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