Tax Glossary Definition
Compounding of an Offence – Compounding of an offence refers to a legal provision through which a person or organization accused of an offence can settle the matter by paying a prescribed fee or penalty, thus avoiding prosecution or continuation of court proceedings. This process helps reduce litigation and promotes quicker resolution of minor or technical violations.
Example: Under the Income Tax Act, an assessee who fails to file a return on time may request compounding by paying a specified penalty instead of undergoing prosecution.
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