Hardship clause

Hardship Clause – A hardship clause in taxation is a provision that enables taxpayers experiencing severe financial difficulties to seek relief, deferment, or special consideration from tax authorities. Such clauses are included in tax laws or regulations to ensure equity and fairness, allowing flexibility when strict compliance with tax obligations would impose undue financial strain on individuals or businesses. The relief provided under a hardship clause may include payment deferrals, installment arrangements, reduced penalties, or temporary exemptions. Tax authorities typically require documentation and evidence to demonstrate genuine hardship before granting such concessions.

Example: A small business facing temporary cash flow problems due to an unforeseen natural disaster may request tax payment relief under a hardship clause, allowing them to pay taxes in installments instead of a lump sum