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

Verma & Co, a deductor, failed to deduct tax on a payment to a resident and obtained a certificate from an accountant under section 398(2) to avoid being treated as an assessee in default. The firm also failed to collect tax on another transaction. Under Rule 221 of the Income-tax Rules, 2026, which Forms apply respectively for the non-deduction and the non-collection?

Form No. 149 applies to non-deduction or short deduction of tax, and Form No. 150 applies to non-collection or short collection. Rule 221 prescribes these as the accountant's certificates, furnished to the Director General of Income-tax (Systems) or the person authorised by him.

  1. AForm 149 for non-deduction and Form 150 for non-collectionCorrect
  2. BForm 150 for non-deduction and Form 149 for non-collection
  3. CForm 149 for both
  4. DForm 138 for non-deduction and Form 143 for non-collection

Explanation

Rule 221(1) requires the accountant's certificate in Form 149 for non-deduction or short deduction, and Form 150 for non-collection or short collection. Swapping them is the main error. Forms 138 and 143 are quarterly statement forms and not accountant certificates.

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