Income Tax 2025

Appearance

Failure to pay tax to credit of Central Government under Chapter XIX-B. ​

476(1) ​

If a person fails to—

  • (a) pay to the credit of the Central Government, the tax deducted at source by him as required by or under the provisions of Chapter XIX-B; or
  • (b) pay tax or ensure payment of tax to the credit of the Central Government, as required under— (i) Note 3 in Table in section 393(3); or (ii) Note 6 to section 393(1) (Table: Sl. No. 8), he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years, and shall also be liable to fine.

476(2) ​

The provisions of this section shall not apply if the payment referred to in sub-section (1)(a) has been credited to the Central Government on or before the time prescribed for filing the statement for such payment under section 397(3)(b).

Explanation

Section Summary: ​

This section addresses the consequences of failing to pay tax deducted at source (TDS) or other specified taxes to the Central Government as required under Chapter XIX-B of the Income Tax Act. It imposes strict penalties, including imprisonment and fines, for non-compliance. The section also provides an exception if the tax is paid before the deadline for filing the relevant statement.

Key Changes: ​

  1. Introduction of Rigorous Imprisonment: Earlier provisions may have included penalties or fines, but this section explicitly introduces rigorous imprisonment as a punishment for non-payment of TDS or other specified taxes.
  2. Clarification of Exceptions: The section now clearly states that penalties will not apply if the tax is paid before the deadline for filing the statement under section 397(3)(b).

Practical Implications: ​

  1. For Taxpayers and Businesses: This section emphasizes the importance of timely payment of TDS and other taxes. Failure to comply can result in severe consequences, including imprisonment and fines.
  2. For Compliance Processes: Businesses and individuals responsible for deducting and remitting taxes must ensure strict adherence to deadlines and payment requirements to avoid penalties.

Critical Concepts: ​

  1. Tax Deducted at Source (TDS): A mechanism where a person deducts tax at the time of making certain payments (e.g., salary, interest, rent) and remits it to the government.
  2. Rigorous Imprisonment: A form of imprisonment involving hard labor, indicating the seriousness of the offense.
  3. Chapter XIX-B: Refers to the provisions related to TDS and other tax collection mechanisms under the Income Tax Act.

Compliance Steps: ​

  1. Timely Payment of TDS: Ensure that TDS is deducted and paid to the Central Government within the prescribed timelines.
  2. Filing of Statements: File the required statements (e.g., TDS returns) under section 397(3)(b) on or before the due date.
  3. Documentation: Maintain accurate records of TDS deductions and payments to substantiate compliance in case of scrutiny.

Examples: ​

  1. Scenario 1: A company deducts TDS on employee salaries but fails to remit the deducted amount to the Central Government by the due date. Under this section, the company and its responsible officers could face rigorous imprisonment and fines.
  2. Scenario 2: An individual deducts TDS on rental income but pays the tax to the government before filing the TDS return. In this case, the provisions of this section would not apply, and no penalties would be imposed.

This section underscores the importance of timely tax compliance and the severe consequences of failing to meet these obligations.