Skip to content

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

Gupta Pvt. Ltd. collected tax at source of Rs. 12,00,000 and failed to pay it to the Central Government. It paid the full amount before the time prescribed for filing the statement of such collection. Under the Income-tax Act, 2025, what is the consequence for the prosecution provisions?

The prosecution provision does not apply. Although Rs. 12,00,000 would otherwise fall in the band above Rs. 10 lakh, the Act exempts the collector who pays the tax to the Central Government on or before the time prescribed for filing the statement relating to that payment.

  1. AThe prosecution provision does not apply because payment was made on or before the time prescribed for filing the statementCorrect
  2. BSimple imprisonment up to six months, or fine, or both, still applies since the tax exceeds Rs. 10 lakh
  3. COnly fine applies, as late payment reduces the offence category
  4. DSimple imprisonment up to two years applies because the default was not discovered by the department

Explanation

The section says its provisions do not apply if payment of tax collected is made on or before the time prescribed for filing the statement. The Rs. 12 lakh amount would otherwise attract the six-month band, but the exception removes liability. Hence the other options are wrong.

Did you get it right without looking?

One question tells you little. A timed set on Tax Deducted at Source and Tax Collected at Source shows your real accuracy, how long you take and where you lose marks.

Practise Tax Deducted at Source and Tax Collected at SourceFree diagnostic mock

More Tax Deducted at Source and Tax Collected at Source questions