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CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Return of Companies

Which statement about the tax on accreted income under section 352 of the Income-tax Act, 2025 is correct?

Tax on accreted income is treated as final payment on that income, so no credit, set-off or deduction for it can be claimed under any other provision. It is additional to tax on total income and is charged at the maximum marginal rate.

  1. AIt is paid in place of the regular tax and the person need not pay tax on total income
  2. BIt is charged at the rate of 30 per cent irrespective of the person's rate
  3. CIt is final payment, and no credit or deduction for it can be claimed under any other provisionCorrect
  4. DIt can be set off against the tax payable on total income of the later tax years

Explanation

Section 352(5) states that payment of tax on accreted income is deemed the final payment of tax on that income, and no credit or deduction can be claimed for it elsewhere in the Act. Option A is wrong because the tax is additional to tax on total income. Option B is wrong because the charge is at the maximum marginal rate, not a fixed 30 per cent.

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