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

Mehta Traders, a buyer, is required to collect tax at source on a purchase. Under the Income-tax Act, 2025, what can the buyer do if its total income justifies collection at a lower rate?

The buyer may apply to the Assessing Officer for collection of tax at a lower rate. If the officer is satisfied that the buyer's total income justifies it, a certificate is issued, and the person collecting the tax must collect at the certificate rate until it expires.

  1. AApply to the Assessing Officer, who may issue a certificate for collection at a lower rate, which the collector must follow till its validityCorrect
  2. BInstruct the seller to collect tax at any rate the buyer considers appropriate
  3. CApply to the Assessing Officer for a certificate of nil collection only, as lower rates are not permitted
  4. DWait for assessment and claim the excess as a deduction from total income

Explanation

For collection at source, the buyer, licensee or lessee may apply to the Assessing Officer for collection at a lower rate. If satisfied, the AO issues a certificate and the collector collects at the rate specified until validity. The provision speaks of a lower rate, not a rate chosen by the buyer.

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