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CS Executive · Tax Laws and Practice · Direct Tax at a Glance

Under the Income-tax Act, 2025 (applicable from the June 2027 session), tax on an income is payable directly by the assessee in which of the following situations?

Tax is payable directly by the assessee where the Chapter provides no deduction of tax at source for that income at the time of payment, or where tax was required to be deducted but was not. Correct deduction removes the direct liability to that extent.

  1. AWhere tax has been correctly deducted at source in full from that income
  2. BWhere the Chapter has no provision to deduct income-tax on that income at the time of paymentCorrect
  3. CWhere the payer has deducted tax and deposited it with the Government
  4. DWhere the income is fully exempt and no tax is due

Explanation

Section 391(1) says direct payment by the assessee arises when there is no provision to deduct tax on that income at the time of payment, or when tax has not been deducted as required. Where tax is correctly deducted and paid, the assessee is not called upon to pay it again, so the other options do not create direct liability.

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