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CS Executive · Tax Laws and Practice · Procedural Compliance under Income Tax

Under the Income-tax Act, 2025 (applicable from the June 2027 session), tax deducted at source and paid to the Central Government is treated as:

Tax deducted at source and deposited with the Central Government is treated as payment of tax on behalf of the person from whose income it was deducted. The deductor only acts as a channel, so the deductee receives the credit against his own tax liability.

  1. AA payment of tax on behalf of the person from whose income it was deductedCorrect
  2. BA payment of tax on behalf of the deductor only
  3. CA penalty recoverable in addition to the final tax, not creditable to anyone
  4. DAn advance payment that can be claimed only by the Board

Explanation

Section 390(5) provides that tax deducted or collected 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 (or from whom it was collected). The deductor is merely the channel. The option treating it as made on behalf of the deductor reverses this rule.

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