Income-tax Act, 2025

Consequences of failure to deduct or pay or, collect or pay - Section 398

Consequences of failure to deduct or pay or, collect or pay.

398. (1) If a person, including the principal officer of a company,

(a) who is required to deduct or collect any amount under this Act; or

(b) referred to in section 392(2)(a), being an employer,

does not deduct or pay, or does not collect or pay, or after so deducting or collecting fails to pay, the whole or any part of the tax, as required by or under this Act, then such person shall be deemed to be an assessee in default in respect of such tax in addition to any other consequences which that person may incur under this Act.

(2) Irrespective of anything contained in sub-section (1), any person,

(a) including the principal officer of a company, who fails to deduct; or

(b) responsible for collecting tax as per section 394(1) (Table: Sl. Nos. 1 to 5 and 9), who fails to collect,

the whole or any part of the tax, as required under this Chapter, on the amount paid or credited to the account of payee or, on the amount collected or debited to the account of the buyer or licensee or lessee, as the case may be, shall not be deemed to be an assessee in default in respect of such tax, if the payee or buyer or licensee or lessee has

(i) furnished his return of income under section 263;

(ii) taken into account the amount for computing income in that return of income; and

(iii) paid the tax due on the income declared by him in such return of income,

and the person furnishes a certificate to this effect from an accountant in the form as may be prescribed.

(3) (a) Without prejudice to sub-section (1), if any person, as referred to in that sub-section does not deduct or collect the whole or any part of the tax or after deducting or collecting fails to pay the tax as required under this Act, he shall be liable to pay simple interest

(i) at 1% for every month or part of a month on the amount of such .... To read the full section download the app from Google Play store