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
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
    NewsBill
    Exemption to a foreign company on income arising on account of providing capital equipment etc. to a...
    NewsBill
    Exclusion of specified business of Non-residents which are under presumptive taxation from the appli...
    NewsBill
    ​​​​​​​Exemption to non-residents for rendering services u...
    NewsBill
    Extension of period of deduction for units in IFSC and rationalization of tax rate
    NewsBill
    Rationalisation of certain terms for treasury centres in IFSC
    NewsBill
    Rationalization of Minimum Alternate Tax provisions
    NewsBill
    Rationalisation of TCS rates
    NewsBill
    Clarification regarding jurisdiction to issue notice u/s 148 where income has escaped assessment and...
    NewsBill
    ​​​​​​​Assessments not to be invalid on ground of any mist...
    NewsBill
    Clarifying time-limit for completion of assessment under section 144C.
    NewsBill
    Clarifying the manner of computation of sixty days for passing the order by the Transfer Pricing Off...
    NewsBill
    Amendments in Chapter XIII -G for giving effect to extension of Tonnage tax scheme to Inland Vessels
    NewsBill
    Penalty provision for non-furnishing of statement or furnishing inaccurate information in a statemen...
    NewsBill
    Providing definition of “commodity derivative”
    NewsBill
    Providing definition of “authorised person”
    NewsBill
    Correction of referencing error
    NewsBill
    Correction of referencing error
    NewsBill
    Correction in provisions relating to Income from House Property and Permanent Account Number
    NewsBill
    Guidelines to be binding on income-tax authorities and person liable to deduct or collect income-tax
    NewsBill
    Clarifying repeal and savings clause where amount allowed as deduction earlier is to be treated as i...
❯❯
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
    NewsBill
    Show AI Summary
    Exemption for foreign companies' income from supplying capital equipment to contract manufacturers in custom bonded areas.
    An exemption is introduced for income of a foreign company from providing capital goods, equipment or tooling to an Indian-resident contract manufacturer located in a custom bonded area that manufactures electronic goods for the foreign company for consideration; the time-limited exemption applies up to the tax year 2030-2031 and takes effect from 1 April 2026, applying to the tax year 2026-27 and subsequent years within the stated period.
    NewsBill
    Show AI Summary
    Non-resident cruise operations and electronics manufacturing services excluded from MAT when using presumptive taxation.
    Amendment excludes certain specified non-resident businesses that opt for presumptive taxation from the scope of Minimum Alternate Tax, adding cruise ship operations and services or technology for establishing electronics manufacturing facilities for resident companies to the excluded categories, with prospective application to subsequent tax years.
    NewsBill
    Show AI Summary
    Non-resident service providers: five-year exemption for foreign income when rendering services under notified Indian schemes.
    An individual who has been a non-resident for five consecutive tax years immediately preceding their first visit to India to render services under a Scheme notified by the Central Government may be exempt, for five consecutive tax years commencing with that first tax year, from tax on income that accrues or arises outside India and is not deemed to accrue or arise in India, subject to prescribed conditions.
    NewsBill
    Show AI Summary
    IFSC units and OBUs will get a longer 100% deduction period and post-expiry income taxed at 15%.
    Proposed amendments extend the 100% deduction under section 147 for IFSC units from 10 consecutive years out of 15 to 20 consecutive years out of 25, and for OBUs from 10 consecutive years to 20 consecutive years; business income from IFSC after the deduction period will be taxed at 15%. The amendments apply from 1 April 2026 to the tax year 2026-27 and subsequent years.
    NewsBill
    Show AI Summary
    Treasury centre dividend exclusion limited to cross border group loans in notified jurisdictions with parent listed abroad.
    Amendment restricts the dividend exclusion for inter group advances or loans involving a Finance company or Finance unit by requiring the other group entity to be located in a notified jurisdiction outside India and the group's parent or principal entity to be listed abroad; the Central Government will notify eligible jurisdictions. It also defines "group entity" by reference to the IFSCA (Payment Services) Regulations, 2024, and defines "parent/principal entity" by voting power and board control tests; the changes apply from 1 April 2026 for tax year 2026 27 onward.
    NewsBill
    Show AI Summary
    Minimum Alternate Tax: MAT rate cut to 14% and treated as final in the old regime with limited credit set off.
    MAT in the old corporate tax regime will be treated as final tax and no new MAT credit will be allowed; the MAT rate is reduced to 14%. Existing MAT credit set off is limited: domestic companies may set off MAT credit only in the new regime up to 25% of annual tax liability, while foreign companies may set off to the extent normal tax exceeds MAT in the relevant year. These amendments apply from 1 April 2026 for tax year 2026 27 and subsequent years.
    NewsBill
    Show AI Summary
    TCS rates on select receipts revised, including LRS and overseas tour packages, effective April 1, 2026.
    Proposed rationalisation of TCS rates sets uniform rates and adjusts specific receipts: alcoholic liquor, scrap, and certain minerals rise from 1% to 2%; tendu leaves fall from 5% to 2%. Under the Liberalised Remittance Scheme, TCS for education or medical remittances over the prior threshold is reduced from 5% to 2% (20% unchanged for other purposes). TCS on sale of an overseas tour programme package is set at a flat 2% with the threshold removed. The amendment is effective 1 April 2026.
    NewsBill
    Show AI Summary
    Reassessment notices will be issued by Assessing Officers, not NaFAC, clarifying the pre-assessment role and scope.
    The amendment clarifies that the pre-assessment enquiry and the decision to issue a reassessment notice are carried out by the Assessing Officer and that the National Faceless Assessment Centre or its assessment units shall not be deemed to be the Assessing Officer for issuance of reassessment notices or related pre-assessment steps; corresponding amendments align the new income-tax statute and the clarification is made retrospective to 1 April 2021 while the new Act's amendment is effective 1 April 2026.
    NewsBill
    Show AI Summary
    Computer-generated Document Identification Number: assessments not invalidated for DIN quoting mistakes if referenced in any manner.
    Assessments and related proceedings under the Income-tax Act, 1961 shall not be invalid for mistakes, defects or omissions in quoting a computer-generated Document Identification Number (DIN) provided the assessment order or proceeding references that DIN in any manner; a reference to the DIN is sufficient compliance even if notices or summons contain minor defects.
    NewsBill
    Show AI Summary
    Clarifying time-limit: section 144C timelines govern assessment finalisation; sections 153/153B govern draft order stage.
    Timelines for finalisation of assessments under section 144C govern completion of assessment notwithstanding the time limits in section 153 and section 153B. Acceptance of a draft order requires completion within one month from the end of the month in which acceptance is received or the 30 day objection period expires; where objections go to the DRP, the DRP must direct within nine months and assessment must be completed within one month from the end of the month in which directions are received. Amendments will clarify this in the 1961 Act (with retrospective dates) and in the Income-tax Act, 2025.
    NewsBill
    Show AI Summary
    Transfer Pricing order timeframe clarified to include the final limitation date and apply retrospectively to past cases
    Clarifies that when computing the sixty-day timeframe for the Transfer Pricing Officer to pass an arm's length price order, the final limitation date is included in that sixty-day calculation; the amendment operates notwithstanding judicial decisions and is framed to apply retrospectively in the existing law and prospectively in the new tax code to ensure uniform interpretation and reduce litigation.
    NewsBill
    Show AI Summary
    Tonnage tax scheme extended to inland vessels with registration, training, and tonnage computation changes effective April 2026.
    Amendments to Chapter XIII-G clarify that tonnage computation uses a "valid certificate" and, for inland vessels, the "certificate of registration" under the Inland Vessels Act, 2021; extend core activity coverage to include inland vessel passenger activities; require compliance with minimum training guidelines issued by the Inland Waterways Authority of India where applicable and adjust the compliance-certificate requirement to refer to the designated authority for inland vessels; add IWAI consultation for average net tonnage computation; and provide a definition of IWAI. Amendments take effect 1 April 2026 and apply to tax year 2026-27 and subsequent years.
    NewsBill
    Show AI Summary
    Crypto-asset transaction reporting now attracts Rs.200/day for non-filing and Rs.50,000 for inaccurate or uncorrected statements.
    Prescribed reporting entities must furnish statements on crypto asset transactions; the Finance Bill introduces a penalty of Rs. 200 per day for non furnishing and a penalty of Rs. 50,000 for furnishing inaccurate particulars and failing to correct them by amending the statute governing penalty provisions.
    NewsBill
    Show AI Summary
    Commodity derivative definition to be added to Income-tax Act, 2025 aligning with the 1961 Act, effective April 1, 2026.
    Amend the Income-tax Act, 2025 to provide a statutory definition of commodity derivative matching the definition in the Income-tax Act, 1961 for use in the definition of specified derivative transaction. The amendment is contained in Clause 33 of the Finance Bill, 2026 and takes effect from 1 April 2026.
    NewsBill
    Show AI Summary
    Definition of authorised person clarified as the payor for non resident payments for foreign exchange asset transfers.
    Adds a statutory definition of authorised person to identify the person responsible for paying when consideration is paid to a non resident for transfer of a foreign exchange asset, aligning the 2025 Act with earlier income tax law and amending the provision governing the person responsible for paying to clarify payor identification and related withholding and reporting obligations.
    NewsBill
    Show AI Summary
    Union Budget amendment corrects a cross reference to ensure spouse income from transferred assets is properly attributed.
    Section 99(2) currently misreferences the provision governing spouse income from transferred assets by citing the clause on salary or commission, and the Finance Bill proposes to correct section 99(2) to cite the clause dealing with income arising from transferred assets; the Bill also proposes an amendment to section 402(27), both taking effect from 1 April 2026.
    NewsBill
    Show AI Summary
    TDS on sale of immovable property reference corrected to Table 3(i); amendment effective 1st April 2026.
    Note 3 to section 393(1) [Table: Sl. No. 3(i)]-which applies TDS on sale of immovable property where sale consideration or stamp duty value meets the prescribed threshold-erroneously referred to Table Sr. No. 3(iii). The Finance Bill, 2026 proposes to amend Note 3 to correct the reference to Table Sl. No. 3(i) so the TDS provision operates as intended; the amendment takes effect from 1st April, 2026 (Clause 72).
    NewsBill
    Show AI Summary
    Income from house property and PAN rules amended to include prior-period interest and expand PAN quoting rules.
    The amendments provide that annual value of property held as stock-in-trade is nil for up to two years after completion certificate; that the aggregate deduction ceiling for interest on borrowed capital for self-occupied property shall include prior-period interest; and that the tax board may make rules requiring PAN quoting in documents for transactions not related to business or profession, effective 1 April, 2026.
    NewsBill
    Show AI Summary
    Guidelines for TDS/TCS will be binding on persons required to deduct or collect tax from April 1, 2026.
    The amendment expressly makes guidelines issued to remove difficulties in giving effect to the TDS/TCS chapter binding on income-tax authorities and on the person liable to deduct or collect income-tax, correcting an omission and aligning the provision with the intent of existing law; the amendment takes effect from 1 April 2026.
    NewsBill
    Show AI Summary
    Tax treatment: previously allowed deductions or excluded amounts will be treated as income under the new Act from 2026 27 onward.
    Amendment to section 536(2)(h) provides that sums allowed as deductions or not included under the repealed Income-tax Act, 1961 will be deemed income under the Income-tax Act, 2025 if they would have been includible under the 1961 Act, even without any violation of prior conditions, effective 1 April 2026 for tax year 2026-27 onward.

    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