Just a moment...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
Make Most of Text Search
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
❮❮ Hide
Default View
Expand ❯❯
Close ✕
🔎 TMI Notes - Adv. Search
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws----
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ----
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
RelevanceDefaultDate
    NewsBills
    Amendment of Section 55 of the Act (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
    NewsBills
    Direct Tax Vivad se Vishwas Scheme, 2024 (TAX ADMINISTRATION)
    NewsBills
    Amendment of provisions related to Equalisation Levy (TAX ADMINISTRATION)
    NewsBills
    Amendments in section 42 and 43 of the Black Money Act, 2015 relating to penalty for failure to disc...
    NewsBills
    Amendments proposed in section 276B of the Act for rationalisation of provisions (TAX ADMINISTRATION...
    NewsBills
    Reducing time limitation for orders deeming any person to be assessee in default (TAX ADMINISTRATION...
    NewsBills
    Widening ambit of section 200A of the Act for processing of statements other than those filed by ded...
    NewsBills
    Extending the scope for lower deduction / collection certificate of tax at source (TAX ADMINISTRATIO...
    NewsBills
    ​​​​​​​Notification of certain persons or class of persons...
    NewsBills
    Time limit to file correction statement in respect of TDS/ TCS statements (TAX ADMINISTRATION)
    NewsBills
    Penalty for failure to furnish statements (TAX ADMINISTRATION)
    NewsBills
    Submission of statement by liaison office of non-resident in India (TAX ADMINISTRATION)
    NewsBills
    Determination of Arms Length Price in respect of specified domestic transactions in proceedings befo...
    NewsBills
    Discontinuation of the provisions allowing quoting of Aadhaar Enrolment ID in place of Aadhaar numbe...
    NewsBills
    ​​​​​​​Amendments in sections 245Q and 245R related to Adv...
    NewsBills
    Powers of the Commissioner (Appeals) (TAX ADMINISTRATION)
    NewsBills
    Amendment of section 271FAA to comply with the Automatic Exchange of Information (AEOI) framework (T...
    NewsBills
    Amendment to include the reference of Black Money Act, 2015 for the purposes of obtaining a tax clea...
    NewsBills
    Rationalisation of provisions related to time-limit for completion of assessment, reassessment and r...
    NewsBills
    Amendment of Section 80G (TAX ADMINISTRATION)
❯❯
MaximizeMaximizeMaximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

    +

    Are you sure you want to delete "My most important" ?

    NOTE:

    Notes
    Showing Results for :
    Reset Filters
    Results Found:
    Show All SummariesHide All Summaries
    NewsBills
    Show AI Summary
    Fair market value determination clarified for offer for sale shares listed after transfer, enabling computation of cost of acquisition.
    Amendment extends the Explanation for computing fair market value to include equity shares sold under an offer for sale in an IPO that were unlisted on 31 January 2018 or at acquisition but listed subsequent to transfer; FMV is to be determined by applying the Cost Inflation Index proportion between 2017-18 and the first year of holding (or 2001-02 baseline) to the cost of acquisition, and the change is retrospective to 1 April 2018.
    NewsBills
    Show AI Summary
    Vivad se Vishwas scheme proposed to settle direct tax disputes and reduce CIT(A) litigation backlog.
    Introduction of a Direct Tax Vivad se Vishwas Scheme, 2024 to enable settlement of disputed direct tax issues pending at appellate levels, particularly at Commissioner of Income-tax (Appeals), to reduce litigation and expedite disposal. The proposal, prompted by the prior Direct Tax Vivaad Se Vishwas Act, 2020 and rising appeal pendency, will commence and conclude on dates to be notified by the Central Government and is set out in clauses 88 to 99 of the Finance (No.2) Bill, 2024.
    NewsBills
    Show AI Summary
    Equalisation levy inapplicable to consideration for e commerce supply or services, reinstating exemption under section 10 and easing compliance.
    The equalisation levy shall not apply to consideration received or receivable for e commerce supply or services on or after 1 August 2024. Income from e commerce supply or services made, provided or facilitated on or after 1 April 2020 but before 1 August 2024 shall be governed by clause (50) of section 10 of the Act, restoring its prior exemption framework where applicable. The exclusion for amounts effectively connected to a permanent establishment in India remains in force.
    NewsBills
    Show AI Summary
    Penalty exemption threshold for undisclosed foreign assets increased, reducing penalty exposure for small value foreign holdings.
    Amendments to sections 42 and 43 of the Black Money Act reinforce resident reporting obligations for foreign assets and income and confirm that failure to disclose may attract a penalty under section 42 or 43. The Finance Bill proposes raising the proviso exemption for low value assets (other than immovable property) so the sections will not apply where the aggregate value of such assets does not exceed a revised threshold, addressing stakeholder concerns that the prior threshold led to penalties disproportionate to asset value.
    NewsBills
    Show AI Summary
    Prosecution exemption for TDS: specified deductors spared if quarterly TDS is paid by the filing deadline, new Finance Bill rule.
    The amendment exempts a person from prosecution for failure to pay tax deducted at source where the tax for a quarter is paid to the credit of the Central Government on or before the time prescribed for filing the quarterly statement under the Act, thereby creating a temporal safe harbour tied to the statutory filing deadline.
    NewsBills
    Show AI Summary
    Time limit for deeming assessee in default reduced to six years for deduction and collection; correction statement extends limitation.
    Amendments to section 201 and insertion of sub section (7A) in section 206C impose a uniform limitation: no order deeming a person an assessee in default shall be made after six years from the end of the financial year in which payment/credit occurred or tax was collectible, or two years from the end of the financial year in which a correction statement is delivered, whichever is later; effective 1 April 2025.
    NewsBills
    Show AI Summary
    Expanded TDS statement processing allows tax board to scheme for processing statements filed by non-deductors.
    Amendment expands the scope of Section 200A to permit the Board to make a scheme for processing statements of tax deduction or correction statements filed by persons other than the deductor, addressing filings like exchange-submitted statements where the deductee provides tax details, with effect from the first day of April, 2025.
    NewsBills
    Show AI Summary
    Lower deduction certificate extended to transactions under 194Q and 206C(1H) to reduce overlapping withholding and collection burdens.
    The proposal amends subsection (1) of section 197 and subsection (9) of section 206C to include the buyer-side withholding provision and the seller-side collection provision within the scope of a lower deduction/collection certificate, allowing taxpayers to seek reduced withholding or collection rates to address blocked funds, refund processes, and overlapping compliance obligations.
    NewsBills
    Show AI Summary
    TCS exemption to allow no or lower collection from notified exempt persons, easing compliance for tax exempt entities.
    The Central Government is empowered to notify, in the Official Gazette, persons or classes of persons-including institutions, associations or bodies-for whom no TCS shall be collected or for whom TCS shall be collected at a lower rate in respect of specified transactions; this addresses cases where entities with tax-exempt income and no return-filing obligation nonetheless face TCS, and the amendment prescribes a prospective commencement for the relief.
    NewsBills
    Show AI Summary
    Time limit for correction statements: limits post filing revisions of TDS/TCS statements, imposing multi year finality to filings.
    Imposes a six year cut off for delivering correction statements for TDS and TCS: no correction statement may be delivered after six years from the end of the financial year in which the original statement was delivered, thereby providing finality to TDS/TCS filings and preventing indefinite post filing revisions.
    NewsBills
    Show AI Summary
    Penalty for failure to furnish statements: shortened compliance window limits penalty relief after late TDS/TCS filing.
    The penalty provision for failure to furnish TDS/TCS statements is amended so that no penalty applies only if, after paying TDS/TCS with fees and interest to the Central Government, the person files the TDS/TCS statement within a shortened compliance period measured from the time prescribed for furnishing such statement.
    NewsBills
    Show AI Summary
    Furnishing obligation for liaison offices: late filing draws daily penalty with a capped alternative and reasonable cause defence.
    Non-resident liaison offices must furnish an annual statement of activities within a period to be prescribed by Rules. Failure to furnish will attract a penalty of one thousand rupees per day where the default does not exceed three months, and one lakh rupees otherwise, subject to relief if the assessee proves reasonable cause; the amendment is prospective and adjusts penalty provisions in the compliance framework.
    NewsBills
    Show AI Summary
    Determination of Arm's Length Price expanded to include unreported specified domestic transactions by the Transfer Pricing Officer.
    The amendment enables the Transfer Pricing Officer to determine and compute the Arm's Length Price for specified domestic transactions that were not referred by the Assessing Officer or not disclosed in the taxpayer's transfer pricing audit report, extending to SDTs the existing procedural powers previously available only for international transactions; the change takes effect from 1 April 2025 and applies to the relevant assessment year and subsequent years.
    NewsBills
    Show AI Summary
    Aadhaar Enrolment ID discontinuation removes enrolment id use for PAN and returns, requiring affected PAN holders to intimate Aadhaar.
    The proviso allowing quoting of an Aadhaar Enrolment ID instead of an Aadhaar number for PAN allotment and income tax returns is proposed to be discontinued effective 1 October 2024 because expanded Aadhaar coverage makes the enrolment ID option a risk for PAN duplication and misuse; persons allotted PAN using an Enrolment ID must intimate their Aadhaar number by a notified date.
    NewsBills
    Show AI Summary
    Advance Rulings withdrawal extended for transferred applications, allowing BAR to accept and record withdrawals within specified windows.
    Amendments permit withdrawal of applications transferred from the former Authority for Advance Rulings to the Board for Advance Rulings where no order under the relevant provision has been passed, by allowing applicants to apply for withdrawal by 31st October, 2024; the Board may, upon such application, order the transferred application to be rejected as withdrawn on or before 31st December, 2024, with the amendment taking effect from 1st October, 2024.
    NewsBills
    Show AI Summary
    Empowerment to refer best judgement assessments back to Assessing Officer with a prescribed time limit for fresh assessment.
    The Bill proposes empowering the Commissioner (Appeals) to set aside best judgement assessments made under section 144 and refer the case to the Assessing Officer for a fresh assessment, and proposes a consequential amendment to section 153(3) to prescribe a time limit for disposal of cases so referred; the amendment applies to appellate orders passed on or after the specified commencement.
    NewsBills
    Show AI Summary
    Penalty for inaccurate reporting clarified to include due diligence failures; reasonable cause defence added under amended provisions.
    The amendment specifies that penalty applies where a person furnishing statements under section 285BA either furnishes inaccurate information or fails to comply with prescribed due diligence, to align with the AEOI/CRS framework. It further adds the penalty provision to the scope of section 273B, allowing a reasonable cause defence against imposition of the penalty. The changes are enacted prospectively as provided in the Finance Bill.
    NewsBills
    Show AI Summary
    Tax clearance certificate requirement now covers Black Money Act liabilities, affecting exit permissions from India.
    The amendment adds liabilities under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 to the list of tax statutes whose outstanding liabilities may render it necessary for a person domiciled in India to obtain a tax clearance certificate before leaving the country, while preserving the proviso requiring recorded reasons and prior approval of the Principal Chief Commissioner or Chief Commissioner; the amendment takes effect from 1 October 2024.
    NewsBills
    Show AI Summary
    Assessment time-limits revised: new deadlines for returns under administrative orders and revived block assessments procedures
    Amendments revise time-limits: assessments on returns filed following administrative directions may be completed within twelve months from the end of the financial year of filing; fresh assessments after appellate or supervisory orders will include cases set aside by the Commissioner (Appeals); timelines are specified for revived proceedings following annulment of block assessments; and search-period exclusions are adjusted so the limitation date falls at the end of the month after exclusion. A consequential provision applies return-obligations to returns furnished under administrative orders. Effective from 1 October 2024.
    NewsBills
    Show AI Summary
    Deductibility under Section 80G updated to specify National Sports Development Fund as eligible recipient; applies prospectively.
    Section 80G is amended to specify that donations to the National Sports Development Fund established by the Central Government are deductible in computing total income, replacing the earlier reference to the National Sports Fund; the amendment is prospective and will apply to subsequent assessment years.

    TMI Notes

    Back

    All TMI Notes

    Showing Results for :
    Reset Filters
      No Records Found

      TMI Notes

      Back

      All TMI Notes

      whatsappJoin Channel
      Showing Results for : Reset Filters

      Garnishee Proceedings and Tax Recovery : Clause 416 of the Income Tax Bill, 2025 Vs. Section 226 of the Income-tax Act, 1961

      1 July, 2025

      Contents
      Acts
      Rules & Regulations
      Summary
      Note

      Note

      -

      Bookmark

      Print

      Print

      Clause 416 Other modes of recovery.

      Income Tax Bill, 2025

      Introduction

      Clause 416 of the Income Tax Bill, 2025, and Section 226 of the Income-tax Act, 1961, both address the critical subject of "Other modes of recovery" for tax arrears. These statutory provisions empower tax authorities with a suite of mechanisms to recover outstanding tax dues from assessees, supplementing the primary recovery process through certificates issued by the Tax Recovery Officer. As the Indian tax regime transitions to a more modern framework through the Income Tax Bill, 2025, an in-depth examination of Clause 416 vis-`a-vis its predecessor, Section 226, is imperative to understand the continuity, reforms, and potential implications for taxpayers and enforcement agencies.

      This commentary systematically analyses Clause 416, elucidates its objectives, dissects its operative elements, and juxtaposes it with the existing Section 226 to highlight similarities, differences, and the practical ramifications of the proposed changes.

      Objective and Purpose

      The legislative intent behind both Clause 416 and Section 226 is to ensure the effective and expeditious recovery of tax arrears by providing the Assessing Officer and the Tax Recovery Officer with alternative or supplementary means of recovery. These provisions are designed to prevent evasion and circumvention of tax liabilities by enabling authorities to leverage third-party debts and assets, thus broadening the net of enforceability beyond the direct assets of the defaulter.

      Historically, the rationale for such provisions is rooted in the need to address the limitations of traditional recovery mechanisms, which often rely on the attachment and sale of the assessee's property, a process that can be time-consuming and susceptible to frustration by strategic asset transfers or concealment. By allowing the authorities to reach out to third parties who owe money to the assessee or hold assets on their behalf, the law intends to plug loopholes and enhance the deterrent effect against default.

      Detailed Analysis of Clause 416 of the Income Tax Bill, 2025

      1. Preliminary Recovery Without Certificate (Sub-sections 1 & 2)

      • Clause 416(1) empowers the Assessing Officer to recover tax by any of the modes provided in the section where no certificate has been drawn up u/s 413. Clause 416(2) extends similar powers to the Tax Recovery Officer, even where a certificate has been drawn up, without prejudice to the primary modes u/s 413.
      • This bifurcation ensures that the authority to initiate recovery through alternative modes is not contingent upon the issuance of a recovery certificate, thus facilitating prompt action. The clause maintains the dual-track approach: the Assessing Officer can act pre-certificate, while the Tax Recovery Officer can act post-certificate, using these alternative modes in addition to the principal recovery process.

      2. Recovery from Salary (Sub-sections 3 & 4)

      • Clause 416(3) specifically addresses recovery from salary income. The Assessing Officer or Tax Recovery Officer may require any person paying salary to the assessee to deduct arrears of tax from subsequent payments. The recipient of such a requisition is statutorily bound to comply and remit the deducted amount to the Central Government.
      • Clause 416(4) carves out an exception for portions of salary exempt from attachment u/s 60 of the Code of Civil Procedure, 1908. This ensures that the statutory protection afforded to a portion of a debtor's salary in civil proceedings is preserved in the context of tax recovery, upholding the principle of minimum subsistence.

      3. Recovery from Third Parties (Sub-section 5)

      Sub-section (5) is the most elaborate and significant part of Clause 416, providing a detailed framework for third-party recovery:

      • (a) Notice to Debtors/Asset Holders: The Assessing Officer or Tax Recovery Officer may issue a written notice to any person from whom money is due or may become due to the assessee, or who holds or may subsequently hold money for or on account of the assessee, requiring payment of the arrears either forthwith or within a specified time.
      • (b) Joint Holders: Notices may be issued to joint holders of assets, with a presumption of equal shares unless proven otherwise.
      • (c) Notification Requirements: Copies of the notice must be forwarded to the assessee and all joint holders at their last known addresses.
      • (d) Binding Effect and Overriding Provisions: Recipients of such notices are bound to comply, and in the case of banks, insurers, or post offices, payment can be made without the production of passbooks, deposit receipts, or policies, overriding contrary practices.
      • (e) Voidance of Subsequent Claims: Any claim respecting the property arising after notice is void against the tax demand.
      • (f) Objection Mechanism: Recipients can object by sworn statement if the sum is not due or not held for the assessee; if the objection is found false, personal liability attaches to the extent of the lesser of the recipient's liability to the assessee or the assessee's tax liability.
      • (g) Flexibility in Notice: The authority may amend, revoke, or extend the notice or payment timeline.
      • (h) Discharge and Indemnity: Payments made in compliance discharge the payer's liability to the assessee to that extent.
      • (i) Personal Liability for Non-compliance: If the recipient of the notice fails to pay, they are deemed an assessee in default, and recovery proceedings may be initiated against them as if the amount were their own tax arrear. The notice acts as an attachment of debt.

      4. Recovery from Money in Court Custody (Sub-section 6)

      • Clause 416(6) allows the Assessing Officer or Tax Recovery Officer to apply to a court holding money belonging to the assessee for payment of the entire amount or, if the sum exceeds the tax due, an amount sufficient to discharge the liability. This provision ensures that judicial custody of funds does not impede tax recovery and that the tax authorities have a direct remedy to access such funds.

      5. Distraint and Sale of Movable Property (Sub-section 7)

      • Sub-section (7) authorizes the Assessing Officer or Tax Recovery Officer, with the approval of an income-tax authority not below the rank of Commissioner, to recover arrears by distraint and sale of the assessee's movable property, as prescribed. This is a potent remedy, to be used where other modes may be inadequate or inappropriate, and is subject to supervisory oversight to prevent abuse.

      Comparative Analysis with Section 226 of the Income-tax Act, 1961

      1. Structural and Terminological Parity

      A close reading reveals that Clause 416 is substantially modelled on Section 226, with only minor variations in language and cross-references (e.g., references to section 413 in Clause 416 versus section 222 in Section 226). The core structure-covering recovery from salary, third parties, court-held funds, and distraint-is preserved.

      2. Key Provisions: Side-by-Side Comparison

      ProvisionSection 226 of the Income-tax Act, 1961Clause 416 of the Income Tax Bill, 2025Analysis
      Authority to recover without certificateAO may recover if no certificate under section 222AO may recover if no certificate under section 413Change in cross-reference reflecting new section numbering; no substantive change
      Authority post-certificateTRO may recover in addition to section 222 methodsTRO may recover in addition to section 413 methodsSame in substance; reflects updated statutory framework
      Recovery from salaryAO/TRO may require deduction from salary; section 60 CPC protectionIdentical provision; section 60 CPC protectionContinuity in protection and process
      Third-party recovery (Notice)Detailed mechanism for notice, compliance, objections, joint holders, etc.Replicates the detailed mechanismSubstantially identical, with minor drafting refinements
      Money in court custodyAO/TRO may apply to court for paymentSame provisionNo change
      Distraint and saleAO/TRO may, with higher authority approval, distrain and sell movable propertySame, with "as prescribed" for mannerReference to prescription of manner may suggest future rules

      3. Notable Refinements or Differences

      • Section References: The principal difference is the updating of internal cross-references to align with the new Bill's structure (e.g., section 222 becomes section 413).
      • Language and Clarity: Clause 416 incorporates minor drafting changes for clarity and modern statutory style, but the operative substance remains unchanged.
      • Rule-making Power: The phrase "in the manner as prescribed" in Clause 416(7) may indicate an intention to lay down detailed rules for distraint and sale, potentially improving procedural clarity and uniformity.
      • Administrative Hierarchy: Both provisions require authorization by a higher authority (not below the rank of Commissioner), ensuring checks on the use of coercive powers.
      • Procedural Safeguards: The mechanisms for objection by third parties, discharge of liability, and voidance of subsequent claims are preserved, maintaining a balance between effective recovery and protection of bona fide interests.

      4. Policy Continuity and Reform

      The near-identical replication of Section 226 in Clause 416 signals a policy choice for continuity rather than substantive reform in the domain of alternative recovery modes. This suggests satisfaction with the existing framework's efficacy, perhaps with an eye toward incremental procedural improvements through subordinate legislation rather than wholesale statutory overhaul.

        Potential Ambiguities and Issues in Interpretation

        • Scope of "may become due": The phrase "money is due or may become due" is broad and may invite disputes about contingent or future claims.
        • Presumption of Equal Shares in Joint Accounts: While practical, this presumption may occasionally result in hardship where actual beneficial interests differ.
        • Personal Liability of Third Parties: The risk of being deemed an assessee in default for non-compliance may deter bona fide dealings with assessees, especially where the third party is unaware of pending tax liabilities.
        • Objection Mechanism: While the provision for sworn objections is a safeguard, the consequences of a false statement (personal liability) are severe and may lead to litigation over the bona fides of the objection.
        • Distraint and Sale Procedures: The effectiveness of this remedy will depend on the procedural rules to be prescribed, which must balance efficiency with due process.

        Practical Implications for Stakeholders

        • Businesses and Employers: Must have robust systems to track and act on notices from tax authorities, as failure to comply can result in direct liability.
        • Banks and Financial Institutions: Need to monitor joint accounts and understand their obligations under garnishee notices, including the presumption of equal shares.
        • Taxpayers: Should be aware that attempts to shield assets by transferring funds to third parties or joint accounts may not prevent recovery.
        • Tax Professionals: Must advise clients on the risks and procedures involved, and assist in filing objections where appropriate.

        Conclusion

        Clause 416 of the Income Tax Bill, 2025, represents a careful and largely faithful modernization of Section 226 of the Income-tax Act, 1961. The core architecture, procedural safeguards, and substantive remedies remain unchanged, ensuring continuity and predictability for taxpayers and administrators alike. The updates in language, cross-references, and rule-making authority reflect an attempt to streamline and future-proof the provision, while maintaining the balance between effective tax recovery and protection of taxpayer rights.

        Going forward, the effectiveness of Clause 416 will depend on the clarity and fairness of the subordinate rules to be prescribed, the vigilance of the revenue authorities in adhering to due process, and the willingness of the judiciary to interpret the provision in a manner that upholds both revenue interests and fundamental rights. Potential reforms could include greater digitalization of the recovery process, clearer guidance on joint account ownership, and enhanced protections for bona fide third parties.


        Full Text:

        Clause 416 Other modes of recovery.

        Topics

        ActsIncome Tax