Withholding tax defaults trigger deemed default status, interest, asset charge, conditional relief, and non-automatic penalties under the new framework.

Section 398 treats a person as an assessee in default for failures to deduct, collect or deposit tax, while preserving interest, penalty and recovery consequences. Relief is available where the relevant recipient has filed a return, included the amount in income, paid due tax, and the prescribed accountant's certificate is furnished. Unpaid tax and interest constitute a charge on all assets of the defaulting person. Penalty requires satisfaction that the default occurred without good and sufficient reasons.

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