Section 399 — Processing. Successor to s.200A, s.206CB of the 1961 Act.
Section 399 is in Chapter XIX — Collection and Recovery of Tax, which runs from section 390 to section 430.
Sub-section (1) prescribes how every statement of tax deducted or collected at source, including a correction statement, is to be processed. The amounts deductible or collectible are computed after adjusting any arithmetical error in the statement and any incorrect claim apparent from information in the statement; interest is computed on the amounts deductible or collectible as reflected in the statement; the fee, if any, is computed under section 427(1) and (2); and the amount payable by, or refundable to, the deductor or collector is then determined after setting the interest and fee against amounts already paid under section 397(3), section 398 or section 427(1) and (2), and any other amount paid by way of tax, interest or fee. An intimation stating the amount payable or refundable is prepared or generated and sent to the deductor or collector, and any refund so determined is granted to him. Sub-section (2) requires the intimation to be sent within one year from the end of the tax year in which the statement is filed, and sub-section (3) allows the Board to make a scheme for centralised processing.
The section gives a summary, largely automated route for checking deduction and collection statements and settling the deductor's position — what more he owes or what comes back to him — without an assessment. The adjustments allowed are deliberately narrow, confined to arithmetical errors and incorrect claims apparent from the statement itself.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time limit for sending the intimation | One year | From the end of the tax year in which the statement is filed — measured from the filing, not from the year of deduction | 399(2) |
Once a statement goes in, expect an intimation quantifying what is payable or refundable, and expect it within one year of the end of the tax year of filing. The processing can only correct arithmetical errors and incorrect claims apparent from the statement, so a substantive dispute is not resolved at this stage. Interest is computed on the amounts deductible or collectible as they appear in the statement, which means an error in the statement itself carries straight into the interest figure — filing a correction statement is the way to fix it, and correction statements are themselves processed under this section. Anything already paid under section 397(3), section 398 or section 427(1) and (2), and any other tax, interest or fee paid, is set off before the final figure is struck.
A deductor files a statement of tax deducted at source in which an arithmetical error understates the amount deductible by Rs. 4 lakh. Processing corrects that error and any incorrect claim apparent from the statement, computes interest on the amounts deductible as reflected in the statement, adds the late-filing fee computed under section 427(1) and (2) — this section fixes no fee of its own — and sets off what has already been paid under section 397(3) or 398 before striking the balance. The intimation must be sent within one year from the end of the tax year in which the statement was filed, so a statement filed in the tax year ending 31 March 2026 cannot be processed under this section after 31 March 2027. Nothing beyond an arithmetical error or an apparent incorrect claim can be touched here; a substantive correction has to come through a correction statement, which is itself processed the same way.
As the intimation under clause (1)(e) specifying the amount payable by, or refundable to, the deductor or collector, and as the refund granted under clause (f). The section names no form; processing is contemplated to run through the Board's centralised scheme under sub-section (3).
The intimation under this section shall be sent within one year from the end of the tax year in which the statement is filed.
See the full 1961 to 2025 concordance.
See the circulars index.