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    Act RulesIncome Tax
    Comparison of section 443 "Penalty in respect of certain income." between the Income-Tax Act, 2025 (...
    Act RulesIncome Tax
    Comparison of section 439 "Penalty for under-reporting and misreporting of income." between the Inco...
    Act RulesIncome Tax
    Comparison of section 438 "Set off and withholding of refunds in certain cases." between the Income-...
    Act RulesIncome Tax
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    Comparison of section 423 "Interest for defaults in furnishing return of income." between the Income...
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    Comparison of section 411 "When tax payable and when assessee deemed in default." between the Income...
    Act RulesIncome Tax
    Comparison of section 406 "Payment of advance tax by assessee on his own accord." between the Income...
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    Comparison of section 402 "Interpretation." between the Income-Tax Act, 2025 (as passed) and the Inc...
    Act RulesIncome Tax
    Comparison of section 398 "Consequences of failure to deduct or pay or, collect or pay." between the...
    Act RulesIncome Tax
    Comparison of section 397 "Compliance and reporting." between the Income-Tax Act, 2025 (as passed) a...
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    Comparison of section 395 "Certificates." between the Income-Tax Act, 2025 (as passed) and the Incom...
    Act RulesIncome Tax
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    Act RulesIncome Tax
    Comparison of section 443 "Penalty in respect of certain income." between the Income-Tax Act, 2025 (...
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    Penalty on undisclosed income: fixed levy on withholding-tax liability, with exemption for timely disclosure and payment.
    A discretionary penalty applies where assessed income includes categories of unexplained or undisclosed receipts imported by reference to existing provisions; it is levied as a percentage of the tax payable under the withholding-tax provision, is additional to that tax, is not imposed if the income was included in the return and the withholding tax paid within the relevant year, and cannot be duplicated by another penalty for the same income. The enacted text omits an explicit cross-application of existing procedural penalty machinery, creating procedural uncertainty.
    Act RulesIncome Tax
    Comparison of section 439 "Penalty for under-reporting and misreporting of income." between the Inco...
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    Penalty for under-reporting: statutory regime imposing enhanced sanctions for deliberate misreporting and rules for computing tax on additions.
    Clause 439 creates a penalty regime for under reporting and aggravated misreporting during tax proceedings by defining deemed under reporting events, prescribing formulae to compute under reported income (including interactions with deemed total income rules), allocating additions across years to prevent double counting, listing exceptions where penalties will not apply, enumerating aggravating misreporting acts that attract higher sanctions, and requiring that penalty be imposed by written order of the Competent Authority.
    Act RulesIncome Tax
    Comparison of section 438 "Set off and withholding of refunds in certain cases." between the Income-...
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    Set-off of tax refunds: authorities may offset or temporarily withhold refunds subject to written intimation and procedural safeguards.
    Section 438 authorises the Assessing Officer and senior Commissioners to set off refunds due against outstanding tax liabilities and to withhold refunds where assessment or reassessment proceedings are pending. Set off must follow written intimation to the taxpayer. Withholding a refund while proceedings are pending is limited in time and requires reasons recorded in writing plus prior approval of the Principal Commissioner or Commissioner.
    Act RulesIncome Tax
    Comparison of section 437 "Interest on refunds." between the Income-Tax Act, 2025 (as passed) and th...
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    Interest on refunds: entitlement to monthly simple interest and additional annual interest where orders trigger refunds.
    Interest on refunds is payable as simple interest at a monthly rate from specified starting dates determined by refund source (tax collected at source/advance tax/treatment as paid; tax paid under specified provisions; excess payments under demand notices), with an additional annual interest where refunds follow certain appellate or rectification orders. Periods attributable to the assessee/deductor are excluded; immaterial refunds below a threshold do not attract interest for defined categories; interest is adjusted if subsequent orders change the underlying amount and assessing officers may demand excess interest.
    Act RulesIncome Tax
    Comparison of section 428 "Fee for default in furnishing return of income." between the Income-Tax A...
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    Two-tier fee for late tax return filing: fixed higher fee for higher-income filers and capped fee for others.
    A statutory two tier fee applies where a person required to furnish a return within the prescribed time fails to do so. Both enacted and bill texts impose a fixed higher fee for taxpayers above the income threshold and a lower fee capped for taxpayers at or below that threshold. The enacted drafting places the capped lower fee first, preserving discretion up to the cap for lower income filers; both texts operate without prejudice to other provisions of the Act and cross reference the filing time provision. Procedural and enforcement details are not stated.
    Act RulesIncome Tax
    Comparison of section 427 "Fee for default in furnishing statements." between the Income-Tax Act, 20...
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    Daily fee for delayed tax statements requires prepayment before filing and is capped at the tax collectible amount.
    A mandatory daily fee applies where a person fails to deliver a prescribed statement of tax deducted or collected at source within the time prescribed in a cross referenced subsection; the fee accrues each day until compliance, is capped so it does not exceed the amount of tax deductible or collectible for the period, and must be paid before delivering the delayed statement, without prejudice to other liabilities under the Act.
    Act RulesIncome Tax
    Comparison of section 425 "Interest for deferment of advance tax." between the Income-Tax Act, 2025 ...
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    Advance tax interest rules require instalment-specific payments; shortfalls attract staged interest and safe harbour thresholds for compliance relief.
    Section 425 imposes interest where advance tax instalments fall short of prescribed percentages by due dates, tying liability to tax due on the returned income. It prescribes staged instalment percentages and graduated interest on interim versus final shortfalls, provides two early safe harbour minima that eliminate interest if met, treats certain classes (profits declared under specified entries) with a distinct simple interest rule for the final instalment, and exempts shortfalls from interest for specified late arising incomes if taxed by later instalments or by 31 March.
    Act RulesIncome Tax
    Comparison of section 424 "Interest for defaults in payment of advance tax." between the Income-Tax ...
    Show AI Summary
    Interest for defaults in payment of advance tax triggers monthly simple interest where advance payments fall short of assessed tax.
    The provision charges simple interest where a taxpayer fails to pay advance tax or pays less than the safe harbour proportion of assessed tax, starting from 1 April following the tax year until determination of total income or completion of regular assessment. Interest is computed on assessed tax or the shortfall, with the assessed tax base reduced by specified items such as tax deducted/collected at source, reliefs and eligible tax credits; reassessment or recomputation increases or reduces interest accordingly and payments already made reduce liability.
    Act RulesIncome Tax
    Comparison of section 423 "Interest for defaults in furnishing return of income." between the Income...
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    Interest for defaults in furnishing return may accrue from differing start dates, altering the interest period and liabilities.
    Section 423 charges simple interest for defaults in furnishing returns by applying a formula based on a tax base "A" and a period "T", with a Table linking specific filing or non-filing scenarios to starting and ending events for the interest period, reductions of the tax base by a prescribed definition of "tax paid", and provisions for adjustment (notice of demand or refund) where post-assessment orders change the tax on which interest is calculated.
    Act RulesIncome Tax
    Comparison of section 415 "Stay of proceedings in pursuance of certificate and amendment or cancella...
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    Stay of recovery: mandatory pause during granted payment time and while appeal-linked reductions remain pending.
    Section 415 requires the Tax Recovery Officer to grant time for payment and stay recovery during that period, and to stay recovery of any portion of a certificate corresponding to a reduced demand while related proceedings remain pending; where the order giving rise to the demand is modified and becomes final, the Officer must amend or cancel the certificate. The Act's enacted text links reductions specifically to modification of the order giving rise to the demand, narrowing the Bill's broader phrasing.
    Act RulesIncome Tax
    Comparison of section 411 "When tax payable and when assessee deemed in default." between the Income...
    Show AI Summary
    Payment deadline for tax demands triggers monthly interest and potential acceleration on instalment default, while relief may be available.
    Clause 411 makes amounts in a notice of demand payable ordinarily within thirty days of service, permits the AO with Joint Commissioner approval to shorten that period, and charges simple monthly interest from the day after the due date until payment. The AO may extend time or allow instalments on timely application, but any instalment default accelerates the whole outstanding amount. Commissioners may reduce or waive interest for genuine hardship or circumstances beyond control, subject to cooperation and procedural safeguards. Where foreign law prevents remittance, the non remittable portion must not be treated as in default.
    Act RulesIncome Tax
    Comparison of section 406 "Payment of advance tax by assessee on his own accord." between the Income...
    Show AI Summary
    Advance tax obligation: taxpayers must self estimate income and pay instalments, with permitted adjustments to remaining payments.
    Every person liable to pay advance tax must remit instalments based on the assessee's own estimate of current income (the specified sum) and the tax thereon, calculated by the prescribed method and paid at prescribed instalment percentages and due dates; taxpayers may increase or reduce amounts in remaining instalments to reflect revised estimates, and the clause itself defines specified sum but is silent on exceptions, enforcement, interest, penalties and procedural recordkeeping.
    Act RulesIncome Tax
    Comparison of section 402 "Interpretation." between the Income-Tax Act, 2025 (as passed) and the Inc...
    Show AI Summary
    Withholding definitions expanded to include both incorrect deduction and collection rates, increasing administrative scrutiny of statements.
    Section 402 provides the definitional framework for deduction and collection at source, specifying who is a person responsible for paying, buyer, seller and other categories, and defining transactional terms including rent, immovable property and digital-economy roles. The Act expands the concept of an "incorrect claim apparent from any information in the statement" to cover both incorrect rates of deduction and incorrect rates of collection, thereby enabling identification of filing errors from statements alone. Turnover thresholds and carve-outs determine when withholding obligations arise; several definitions rely on cross-references to external provisions.
    Act RulesIncome Tax
    Comparison of section 398 "Consequences of failure to deduct or pay or, collect or pay." between the...
    Show AI Summary
    Deemed assessee in default for non-deduction or non-collection of tax exposes deductors/collectors to interest and asset charge.
    Failure to deduct, collect, or pay tax causes the person required to do so to be deemed an assessee in default, liable for interest on delayed deduction/collection and on delayed payment, and, where tax has been deducted or collected but not paid, the tax and interest form a statutory charge on all assets; a safe harbour exists if the recipient has filed a return, included the amount and paid tax and the deductor/collector produces the prescribed accountant's certificate, while penalty can be imposed only if the assessing officer is satisfied there were no good and sufficient reasons for the failure.
    Act RulesIncome Tax
    Comparison of section 397 "Compliance and reporting." between the Income-Tax Act, 2025 (as passed) a...
    Show AI Summary
    TAN/PAN compliance tightens reporting and mandates higher withholding where PAN is not furnished, while shortening correction windows.
    Clause 397 mandates TAN application and mandatory TAN quoting by deductors/collectors, requires payees/payers to furnish a PAN (with enacted text adding a "valid" PAN requirement), prescribes higher withholding/collection rates where PAN is not furnished subject to enumerated exceptions, requires timely deposit of deducted/collected tax and filing of prescribed statements, provides a correction statement mechanism with a time limit, sets special reporting duties for payments to non residents and small interest payments by banks/co operatives/public companies, and preserves collector liability for unpaid but collectible tax.
    Act RulesIncome Tax
    Comparison of section 395 "Certificates." between the Income-Tax Act, 2025 (as passed) and the Incom...
    Show AI Summary
    Certificates for lower tax withholding enable AO-issued rates or nil deduction and proportionate nonresident withholding relief.
    Clause creates an AO-issued certificate system permitting payees, buyers/licensees/lessees and payers to obtain prescribed-form certificates altering the rate (or, under the Act, rate or nil deduction) at which tax is deducted or collected; for non-salary payments to non-residents the payer may seek a proportionate determination of the taxable part; deductors/collectors must issue prescribed documentary certificates to deductees/collectees and the AO may cancel certificates after affording a reasonable opportunity, with detailed forms, validity and procedures left to rules.
    Act RulesIncome Tax
    Comparison of section 394 "Collection of tax at source." between the Income-Tax Act, 2025 (as passed...
    Show AI Summary
    Collection of tax at source: TCS on specified receipts with exemptions, non cumulation and documentation duties.
    Clause 394 prescribes TCS on nine specified receipt types with collectors (sellers, authorised dealers, licensors/lessors) required to collect at prescribed rates at the earlier of debiting the buyer's account or receipt. Indian resident buyers may avoid collection by furnishing a prescribed declaration of end use; the enacted law imposes a delivery timeline for that declaration and adds an exemption for certain education loan funded remittances. The provision includes non cumulation rules to prevent duplicate collection and leaves procedural specifics to subordinate rules.
    Act RulesIncome Tax
    Comparison of section 393 "Tax to be deducted at source." between the Income-Tax Act, 2025 (as passe...
    Show AI Summary
    Tax withholding obligations expanded to cover e-commerce and virtual asset transfers, with precedence rules to prevent multiple deductions.
    Section 393 prescribes a comprehensive TDS matrix covering payments to residents, non-residents and any person, listing payment categories, the person liable to deduct, rates or rates-in-force and monetary thresholds. Deduction is required at credit or payment, whichever is earlier, with specific precedence rules (notably for e-commerce) to prevent multiple deductions. The section contains carve-outs and nil-deduction declaration mechanisms subject to conditions and reporting; operational guidance emphasises mapping payments to entries, retaining declarations and ensuring tax on mixed cash and in-kind transactions before release.
    Act RulesIncome Tax
    Comparison of section 392 "Salary and accumulated balance due to an employee." between the Income-Ta...
    Show AI Summary
    Deduction of tax at source on salaries: payer obligation to withhold at average rate and trustees to withhold on accumulations.
    Section 392 places primary TDS obligation on payers of salary to deduct tax at the time of payment at the average rate on estimated annual income; employers may opt to pay tax on non monetary perquisites. Trustees of recognised provident and superannuation funds must deduct tax where Schedule XI applies, with a specified 10% withholding rule for certain employees' provident fund accumulations. The enacted text tightens prescribed form and verification requirements, alters a cross reference to section 17, and expressly permits eligible start ups to "deduct or pay, as the case may be."
    Act RulesIncome Tax
    Comparison of section 390 "Deduction or collection at source and advance payment." between the Incom...
    Show AI Summary
    Withholding tax and advance payments operate independently of assessment, securing provisional tax credits and rule making authority.
    Deduction or collection at source, advance payment, and specified payments under section 392(2)(a) operate independently of later assessment and are additional to other recovery measures; amounts remitted to the Central Government are treated as tax paid on behalf of the person from whose income tax was deducted, from whom tax was collected, or in respect of whose income tax was paid, and the Board may make rules for crediting such amounts and for attributing the tax year for credit.

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      SEBI

      Empowering Investors: SEBI's New Framework for Enhanced Trading Account Security

      16 January, 2024

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      Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2024/4 - Dated: 12-1-2024 - Ease of Doing Investments by Investors- Facility of voluntary freezing/ blocking of Trading Accounts by Clients

      The SEBI Circular, referenced as SEBI/HO/MIRSD/POD-1/P/CIR/2024/4 and dated 12th January 2024, introduces significant changes aimed at enhancing the safety and ease of doing investments for investors in India. This circular is addressed to all recognized stock exchanges and registered trading members.

      The key issue addressed in this circular is the enhancement of security measures for trading accounts, specifically focusing on the facility for voluntary freezing or blocking of these accounts by clients. This measure is akin to the existing facility for blocking ATM and credit cards, and similar to the voluntary blocking/freezing option available for demat accounts.

      Key Points and Submissions

      1. Background and Need for Change: The shift from traditional call-and-trade methods to online trading has led to concerns over suspicious activities in trading accounts. Investors currently lack the facility to freeze or block their trading accounts in response to such activities.

      2. Proposal for Change: In consultation with the Brokers’ Industry Standards Forum (ISF), SEBI has decided to implement a framework for trading members to provide a voluntary account freezing/blocking facility to their clients. This is to be established by April 1, 2024.

      3. Details of the Policy: The policy will encompass:

        • Modes through which clients can request the blocking of their trading accounts.
        • Process for acknowledging these requests.
        • Timeframe for processing such requests and implementing the account freeze/block.

      4. Implementation and Compliance: Stock exchanges are required to ensure that the guidelines are implemented by July 1, 2024. They must also establish appropriate reporting requirements for trading members and submit a compliance report to SEBI by August 31, 2024.

      5. Obligations for Stock Exchanges: They are advised to take necessary steps for the implementation, make necessary amendments to their rules and regulations, and disseminate information about this new facility to trading members and on their websites.

      6. Legal Basis: The circular is issued under the powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Regulation 30 of SEBI (Stock Brokers) Regulations, 1992.

      Implications and Impact

      • Investor Empowerment: This move significantly empowers investors, giving them more control and security over their trading accounts.
      • Prevention of Fraudulent Activities: The ability to quickly freeze or block an account can prevent potential fraudulent transactions.
      • Ease of Doing Business: This initiative aligns with the broader goal of enhancing the ease of doing business and investments in the Indian securities market.

      Conclusion

      The SEBI's new circular marks a crucial step towards safeguarding investors' interests in the digital age of trading. It reflects SEBI’s commitment to continuously evolving and enhancing the security and convenience of the investment environment in India.

      This article can further be enriched with insights from recent cybersecurity trends in financial markets, comparisons with global practices in trading account security, and expert opinions on the effectiveness of such measures.

       

      Full Text:

      Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2024/4 - Dated: 12-1-2024 - Ease of Doing Investments by Investors- Facility of voluntary freezing/ blocking of Trading Accounts by Clients

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