Direct Tax Laws and International Taxation · Collection, Recovery and Refund of Tax

Recovery of Tax and Tax Recovery Officer under Income-tax Act, 2025

Updated 11 October 2026 · Fact-checked

When an assessee defaults in paying tax, the Tax Recovery Officer (TRO) draws up a certificate (section 413) and recovers the arrears by attaching and selling movable or immovable property, or appointing a receiver. The Assessing Officer or TRO can also use the other modes in section 416, such as notices to debtors and salary deduction.

Understand Recovery of Tax and Tax Recovery Officer

A tax demand that stays unpaid is an arrear. The Act gives the department two sets of tools to recover it. The first is the certificate procedure in sections 413 to 415. The second is the list of other modes in section 416.

Under section 413, when an assessee is in default or deemed to be in default, the Tax Recovery Officer draws up a signed statement in the prescribed form showing the arrears. This statement is the certificate. The TRO then recovers the amount by one or more of these modes: attachment and sale of movable property, attachment and sale of immovable property, and appointing a receiver to manage movable and immovable properties. Arrest and detention of the assessee is no longer a mode. Clause (c) was substituted by Act No. 4 of 2026 with effect from 1 April 2026, and the old clauses on arrest and detention were removed.

The TRO may act whether or not any other mode has already been tried (section 413(2)). The assessee cannot dispute the correctness of the certificate on any ground (section 413(3)). The TRO can cancel the certificate, or correct a clerical or arithmetical mistake, if he considers it necessary (section 413(4)).

Property that the assessee has transferred to his spouse, minor child, son's wife or son's minor child, on or after 1 June 1973, without adequate consideration, is treated as the assessee's property for recovery. For a minor child or son's minor child, this continues even after majority, for arrears relating to periods before that date.

Section 414 says which TRO acts. It is the TRO in whose area the assessee carries on business or profession, or has its principal place. It can also be the TRO in whose area the assessee resides or any of his property lies. If property is in the areas of several TROs and the certificate-drawing TRO cannot recover the full amount, or thinks it necessary to expedite or secure recovery, he may send the certificate, or a certified copy stating the part to be recovered, to the other TRO. That officer then recovers as if he had drawn it up himself.

Key rules to remember

Certificate and modes (section 413): Default → TRO certificate → attach and sell movable / attach and sell immovable / receiver; Modes may be used one or more at a time, whether or not any other mode has been tried. Arrest and detention was removed with effect from 1 April 2026.
Finality of certificate (section 413(3) and (4)): Assessee cannot dispute; TRO may cancel or correct clerical or arithmetical mistakes; Challenge to the underlying demand lies through appeal, not against the certificate.
Which TRO (section 414(1)): Business or profession place OR residence OR location of any property; Jurisdiction is as assigned by the Board or an authorised authority of Commissioner rank or above.
Transfer to other TRO (section 414(2)): Property under several TROs + (cannot recover fully OR expediting or securing recovery) → send certificate or certified copy; A copy is used where only a part of the amount is to be recovered.
Stay and amendment (section 415): TRO may grant time and stay till expiry; if demand reduced → stay the reduced part while further proceedings pend; if final → amend or cancel certificate; Applies where the order is modified in appeal or other proceeding.
Other modes (section 416): Salary deduction; notice to debtor or money-holder; application to court; distraint and sale; Distraint needs authorisation by an authority of Commissioner rank or above.
Foreign recovery (section 418): Agreement with foreign country → certificate exchanged via the Board → TRO recovers and remits after deducting expenses; Works in both directions.

How to solve Recovery of Tax and Tax Recovery Officer questions

Use this order for any question on recovery of tax. It keeps your answer tied to the sections the examiner expects.

1Identify the default: the assessee has an unpaid demand and is in default or deemed in default.
2Decide who acts. The TRO draws up the certificate under section 413. The Assessing Officer can use section 416 modes where no certificate exists.
3Fix the TRO's jurisdiction under section 414: business place, residence, or property location. If property sits in several areas, apply section 414(2).
4List the modes available: attachment and sale of movable property, of immovable property, receiver, and the section 416 modes that fit the facts.
5Check for extended property: transfers to spouse, minor child or son's wife or son's minor child without adequate consideration.
6Check for relief: time granted or demand reduced in appeal, which engages section 415 (stay, amend or cancel).
7Conclude with a clear recommendation or statement of what the officer can do, and cite the section for each point.

Quickest way: Section-map shortcut

When to use it: Use for MCQs and short case questions where you must pick the right section or mode quickly.

413 = certificate and modes. 414 = which TRO. 415 = stay and amendment. 416 = other modes. 418 = foreign agreements.
Words like 'receiver' or 'attachment and sale' point to 413. 'Notice to bank or debtor' or 'salary deduction' point to 416.
If the question says the assessee argues the certificate amount is wrong, the answer is that he cannot dispute it (413(3)).
If the demand fell in appeal, think 415. If property is in another city, think 414(2).
Reject any option that lists arrest and detention as a current mode.

Common mistakes in Recovery of Tax and Tax Recovery Officer

Listing arrest and detention of the assessee as a mode of recovery.
Older notes and the earlier law included it.
Fix: Section 413(1) now has only attachment and sale of movable property, of immovable property, and appointment of a receiver, since 1 April 2026.
Saying the assessee can challenge the certificate before the TRO.
Students assume every officer's order can be disputed.
Fix: Section 413(3) bars disputing correctness on any ground. The TRO may only correct clerical or arithmetical mistakes or cancel it.
Mixing up section 413 and section 416 modes.
Both deal with recovery and the lists look alike.
Fix: Remember 413 is the TRO's certificate route. Section 416 covers salary deduction, notices to debtors, court money and distraint.
Ignoring property held by spouse or minor children.
Students focus only on the assessee's own assets.
Fix: Apply section 413(5): inadequately paid transfers on or after 1 June 1973 to those persons are included, and minors' holdings stay included after majority for earlier arrears.
Thinking the TRO must first try other modes before attachment.
Confusing with a sequence of steps.
Fix: Section 413(2) allows action whether or not any other mode has been tried.
Forgetting to stay recovery when time is granted or demand is reduced.
Section 415 is read less closely.
Fix: Recovery is stayed until the granted time expires. For a reduced demand under further proceedings, stay the reduced part. If final, amend or cancel the certificate.

Worked examples

Example 1

Ramesh Iyer runs a business in Chennai with a tax demand in default. He owns a flat in Pune and a plot in Coimbatore. The TRO in Chennai draws up the certificate and sells his Chennai assets, but a large amount remains unpaid. What can the TRO do, and can Ramesh dispute the certificate?

Show the solution

Under section 413, the TRO draws up the certificate and recovers by attachment and sale of movable or immovable property or by appointing a receiver.
The Chennai TRO has jurisdiction as the place where Ramesh carries on business (section 414(1)(a)).
Ramesh's property in Pune and Coimbatore lies under other TROs. The Chennai TRO could not recover the full amount from property in his own jurisdiction, so section 414(2) applies.
He may send the certificate, or a certified copy specifying the amount if only part is to be recovered, to the TROs whose areas cover the Pune and Coimbatore properties.
Those TROs then recover as if they had drawn up the certificate.
Ramesh cannot dispute the correctness of the certificate on any ground (section 413(3)).

Answer: The Chennai TRO may send the certificate or a certified copy to the TROs in Pune and Coimbatore, who will recover as if they had drawn it up. Ramesh cannot dispute the certificate's correctness.

Example 2

A certificate of ₹12,00,000 was drawn up against Meena Traders. On appeal, the demand was reduced to ₹7,00,000, and the department has filed a further appeal. Later the matter is finally decided at ₹7,00,000. State the TRO's duties at each stage.

Show the solution

The demand fell by ₹5,00,000 (₹12,00,000 − ₹7,00,000) because the order was modified in appeal.
While the department's further appeal is pending, section 415(2)(a) requires the TRO to stay recovery of the part of the certificate amount that relates to the reduction, which is ₹5,00,000, for as long as that proceeding is pending.
The balance of ₹7,00,000 is not covered by this stay, so recovery for it can continue unless time is granted under section 415(1).
When the order becomes final and conclusive at ₹7,00,000, section 415(2)(b) requires the TRO to amend the certificate to ₹7,00,000 (or cancel it if nothing remains due).

Answer: During the pending further appeal, the TRO must stay recovery of ₹5,00,000. When the matter becomes final at ₹7,00,000, he must amend the certificate to ₹7,00,000.

Exam tips

Learn the five sections as a set: 413, 414, 415, 416, 418. Examiners often test which section handles which situation.
In case-based MCQs, watch for the word 'certificate'. Then think of the TRO's powers and the finality rule.
State the modes exactly. Mention that arrest and detention is no longer a mode, since a wrongly included mode loses marks.
In written answers, give a short conclusion for the officer's action, citing the section number against each point.
Do not confuse this topic with recovery of penalty and interest (section 419). That is a separate topic.

Practice questions from Collection, Recovery and Refund of Tax

Recovery of Tax and Tax Recovery Officer in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Recovery of Tax and Tax Recovery Officer: frequently asked questions

Who is the Tax Recovery Officer?

The TRO is the income-tax officer who draws up the certificate and recovers arrears under section 413. Under section 414, the TRO is the one with jurisdiction over the assessee's business place, residence or property.

What are the modes of recovery under section 413?

The TRO can attach and sell movable property, attach and sell immovable property, or appoint a receiver to manage movable and immovable properties. He may use one or more of these modes, whether or not any other mode has been tried.

Can the assessee dispute the certificate?

No. Section 413(3) says the assessee cannot dispute the correctness of the certificate on any ground. The TRO may cancel it or correct a clerical or arithmetical mistake.

Can the Assessing Officer recover tax without a TRO certificate?

Yes. Under section 416, where no certificate has been drawn up, the Assessing Officer may use the modes in that section, such as salary deduction, notices to debtors and money-holders, and distraint with proper authorisation.

Is arrest still a mode of recovery?

Not under section 413 as it stands now. The clauses on arrest and detention were replaced by Act No. 4 of 2026 with effect from 1 April 2026.