Step forward in the rationalization and modernization of recovery of tax collection under Tax law in India : Clause 390(4) of Income Tax Bill, 2025 Vs. Section 202 of Income-tax Act, 1961

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....d compliance mechanisms. Clause 390, and in particular sub-clause (4), is central to this objective, as it deals with the modalities and legal effect of various modes of tax collection, namely deduction or collection at source, advance payment, and other specified payments. Section 202 of the Income Tax Act, 1961, currently governs the relationship between tax deduction at source (TDS) and other modes of tax recovery, establishing that TDS is not the exclusive method and does not preclude recourse to other methods. This commentary undertakes a detailed analysis of Clause 390(4) of the Income Tax Bill, 2025, scrutinizing its language, legislative intent, and practical implications, and juxtaposes it with the current statutory position u/s 2....

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....he Income Tax Bill, 2025, reads as follows: The payment of tax referred to in sub-section (1) shall be in addition to any other mode of tax collection to discharge the liability in respect of income assessed for a tax year. This sub-clause, though succinct, is loaded with legal and administrative import. Its analysis requires an examination of the following elements: * The phrase "in addition to any other mode of tax collection" * The linkage to "liability in respect of income assessed for a tax year" * The interaction with other sub-sections of Clause 390 The Phrase "In Addition to Any Other Mode of Tax Collection" * This language is categorical in its assertion that the payment of tax by deduction at source, collection at sourc....

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....of the tax department to recover the balance, if any, is preserved. Interaction with Other Sub-sections of Clause 390 * Clause 390(1) sets out the three primary modes of tax payment: deduction or collection at source, advance payment, and payment u/s 392(2)(a). Sub-section (2) clarifies that these payments are required irrespective of the timing of assessment. Sub-section (3) provides that nothing in this section affects the charge of tax u/s 4(1), which is the charging provision. Sub-section (5) and (6) deal with the treatment and credit of such payments. * Clause 390(4) thus functions as a linchpin, explicitly stating that the enumerated modes are not mutually exclusive or exhaustive, and do not derogate from the authority's powe....

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....orities: Retain the power to pursue recovery through alternative or additional means if the total tax due is not realized through the initial modes. * Compliance Requirements: Taxpayers must reconcile all payments and ensure that the aggregate matches their assessed liability. Procedural diligence is required to claim credit and avoid penal consequences. Comparative Analysis with Section 202 of the Income Tax Act, 1961 Textual Comparison Section 202 of the Income-tax Act, 1961, states: The power to recover tax by deduction under the foregoing provisions of this Chapter shall be without prejudice to any other mode of recovery. Clause 390(4) of the Income Tax Bill, 2025, states: The payment of tax referred to in sub-section (1) shall ....

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....anisms and the need for flexibility in enforcement. It also aligns with international best practices, where multiple, parallel methods of tax collection are common to ensure efficiency and minimize revenue leakage. Legal and Administrative Consequences * Section 202: Has been judicially interpreted to mean that the existence of TDS provisions does not bar the department from raising additional demands or initiating recovery proceedings if the tax is not fully realized through deduction at source. * Clause 390(4): Codifies this principle in a more comprehensive manner, extending it to all anticipatory or provisional tax payments. This reduces the scope for litigation or interpretational disputes about the finality or sufficiency of TDS,....