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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 62,00,000 but did not deposit it to the Central Government. Under Section 477 of the Income-tax Act, 2025, and assuming the payment was not made before the time for filing the statement, what is the punishment?

Simple imprisonment up to two years, or fine, or both. Section 477(1)(a) applies where the tax collected and not paid exceeds Rs 50 lakh, and Rs 62,00,000 is above that limit. The six-month band applies only to amounts up to Rs 50 lakh.

  1. AFine only, since the amount is a TCS default
  2. BSimple imprisonment up to six months or fine, or both
  3. CSimple imprisonment up to two years, or fine, or bothCorrect
  4. DRigorous imprisonment up to seven years and fine

Explanation

Section 477(1)(a) applies when the tax exceeds Rs 50 lakh. Rs 62 lakh exceeds this, so simple imprisonment up to two years, or fine, or both, is the punishment. The six-month band covers Rs 10 lakh to Rs 50 lakh only, and the seven-year rigorous imprisonment was the earlier provision.

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