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CMA Intermediate · Direct and Indirect Taxation · Tax Deducted at Source and Tax Collected at Source

A seller collected TCS of Rs 12,00,000 but did not pay it to the Central Government by the time the statement was due. Under section 477 of the Income-tax Act, 2025 as amended from 1-4-2026, what is the maximum punishment?

The punishment is simple imprisonment up to six months, or fine, or both. Tax collected of Rs 12 lakh falls between Rs 10 lakh and Rs 50 lakh, which is the band covered by section 477(1)(b) after the 2026 amendment.

  1. AFine only
  2. BSimple imprisonment up to six months, or fine, or bothCorrect
  3. CSimple imprisonment up to two years, or fine, or both
  4. DRigorous imprisonment of not less than three months and up to seven years with fine

Explanation

Rs 12,00,000 exceeds Rs 10 lakh but not Rs 50 lakh, so section 477(1)(b) applies: simple imprisonment up to six months, or fine, or both. The seven-year rigorous imprisonment option is the earlier law. Two years applies only above Rs 50 lakh.

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