Arnold Schwarzenegger meets Jayalalithaa (R) in Chennai (Press Trust of India)

J Jayalalithaa, the former chief minister of Tamil Nadu who was recently released from jail in a corruption case, may be about to receive a break in another case.The union government is allegedly ready to enable Ms Jayalalithaa to make an out-of-court settlement with the income tax department for failing to file returns two decades ago for two consecutive years (1991-92 and 1992-93). Co-accused with her in the criminal case is her close friend, Sasikala Natarajan.In August, the centre set up a committee to process Ms Jayalalithaa's application seeking the compounding of the alleged offences - this means the government's tax department and she can arrive at an agreement without the permission or intervention of the court. The committee has decided in favour of her, said sources.Ms Jayalalithaa is known to enjoy a strong equation with Prime Minister Narendra Modi.In January this year, the Supreme Court ordered that the 66-year-old politician, who was then heading the Tamil Nadu government, will be prosecuted in a Chennai court for alleged tax offences.In late September, Ms Jayalalithaa, who heads the AIADMK which governs Tamil Nadu, was convicted of corruption in a case dating back to her first term as chief minister in the early 90s. She was disqualified as a law-maker and cannot run for election for 10 years, unless her conviction is over-turned by a higher court. Jayalalithaa spent three weeks in jail before being granted bail. The Supreme Court has said that all paperwork for her appeal must be filed by December 18, failing which, she could be re-arrested.

After her arrest, she installed trusted aide O Panneerselvam as the new Chief Minister of Tamil Nadu; at the oath-taking ceremony, he wept into a handkerchief like several other ministers demonstrating their loyalty to their jailed leader.