Direct tax payment and start-up ESOP deferral preserve assessee liability while imposing default consequences on non-compliant deductors.

Direct payment of income tax arises where no tax deduction at source provision applies or where tax required to be deducted has not been deducted. Eligible start-up employees receiving specified securities or sweat equity shares may pay tax on the relevant employment-related income through the prescribed deferred-payment mechanism. A deductor or specified employer that fails to deduct, deposit or pay tax, where the assessee also fails to pay directly, is deemed to be an assessee in default and may face interest, penalty and prosecution.

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