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CA Final · Direct Tax Laws & International Taxation · Deduction, Collection and Recovery of Tax

Under section 390 of the Income-tax Act, 2025, which statement about tax deducted at source and paid to the Central Government is correct?

Tax deducted at source and paid to the Central Government is treated as payment of tax on behalf of the person from whose income it was deducted. Section 390(5) says so, while the charge of tax and other recovery modes remain unaffected.

  1. AIt is treated as payment of tax on behalf of the person from whose income it was deductedCorrect
  2. BIt is a final discharge of the charge of tax under section 4(1), so no assessment arises
  3. CIt is payable only after the assessment for that income is completed
  4. DIt replaces all other modes of tax recovery for that tax year

Explanation

Section 390(5) treats TDS paid to the Central Government as payment on behalf of the person from whose income it was deducted. Section 390(2) makes it payable irrespective of later assessment, 390(3) preserves the charge under 4(1), and 390(4) says it is in addition to other recovery modes.

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