Section 201

What a section 201 notice is

TDS — Assessee in Default. Treated as in default for failure to deduct or deposit TDS. It is a high-severity notice in the tds family under the Income Tax Act 1961.

If you ignore it: Demand, interest, and possible penalty follow.

Time to reply: this notice type carries no standard period. The date is printed on the notice itself and you must read it off the document. Check the payee-has-paid defence and the certificate route. Often a complete answer.

Under the Income Tax Act 2025: section 398. But read that as reference, not as the provision to cite. Under s.536(2) of the 2025 Act, a proceeding for any tax year beginning before 1 April 2026 stays under the Income Tax Act 1961 from the notice through to the appeal — so a notice arriving today for an earlier year is a 1961 Act matter, whatever today's date is.

Section 201 — the law in short

What the courts have decided on section 201, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Bharti Cellular Ltd v ACIT Supreme CourtHelps taxpayer
  We sell prepaid SIMs and vouchers to distributors below list price. Is that margin commission under 194H?
  No. The Supreme Court held that the distributor buys the starter kits and recharge vouchers at a discount on a principal-to-principal basis, so the margin is a trade discount and not commission or brokerage; the operator has no obligation to deduct under s.194H.
• State Bank of India v Assistant Commissioner of Income Tax Supreme CourtHelps department
  My client is an employer facing a s.201 order for not deducting on LTC where the employees' itineraries included a foreign leg but the reimbursement was limited to the domestic shortest-route fare. Is the bona fide estimate defence available?
  No. The Supreme Court held that the moment an employee undertakes travel with a foreign leg it is not travel within India and the payment is outside s.10(5), so the employer was bound to deduct under s.192(1) and was rightly held an assessee in default. It rejected the argument that the reimbursement having been confined to the shortest domestic route saved the exemption, and it rejected the bona fide mistake defence because the employer had the complete travel details before it when settling the bills.
• DIT v Mitsubishi Corporation Supreme CourtCuts both ways
  My Indian payer did not deduct tax at source and paid me gross. The Assessing Officer says I should have paid advance tax and has charged s.234B interest. Which years can he do that for?
  Only from financial year 2012-13 onwards. The Supreme Court held that for every assessment up to and including financial year 2011-12, s.209(1)(d) entitled the assessee to reduce, in computing its advance tax, the income-tax that WOULD BE deductible at source, even though it had in fact received the full amount without deduction — so no s.234B interest could be charged. The proviso to s.209(1)(d) inserted by the Finance Act 2012 with effect from 1 April 2012 reverses that, and from financial year 2012-13 the assessee cannot reduce tax that the payer failed to deduct.
• Director, Prasar Bharati v CIT Supreme CourtHelps department
  My advertising agency bills the advertiser, remits the money to me, and I pay it fifteen per cent back as its margin. The agreement calls it commission. Is that section 194H?
  Yes, on these facts. The Supreme Court held that the fifteen per cent paid to accredited advertising agencies under Doordarshan's agreements was commission within section 194H, so tax had to be deducted on it. What decided the case was the arrangement, not the label on the ledger: the agreement called the sum commission throughout, it was paid over after the appellant had collected the money from the agencies, and the relationship was one of principal and agent rather than principal to principal. Read it against Ahmedabad Stamp Vendors and Bharti Cellular, where the same section did not apply because the distributor bought on its own account.
• Palam Gas Service v CIT Supreme CourtHelps department
  I already paid my sub-contractors during the year and nothing was outstanding at 31 March — can section 40(a)(ia) still disallow the expense for not deducting TDS?
  Yes. The Supreme Court held on 3 May 2017 that the word "payable" in section 40(a)(ia) covers amounts actually paid as well as amounts still outstanding. Sections 194C and 200 require deduction at the time of credit or of payment, whichever is earlier, and payment over to the Government within the prescribed time; a person who ignores that obligation must bear the consequences the Act lays down, of which disallowance under section 40(a)(ia) is one. The view of the Punjab and Haryana, Madras and Calcutta High Courts was approved, and the Allahabad High Court's decision in CIT v. Vector Shipping Services (P) Ltd. was overruled.
• ITC Ltd v CIT (TDS) Supreme CourtHelps taxpayer
  Our restaurant and banquet bills carry a tip that the customer adds on the card. The money lands in our bank account and we hand it to the staff with their wages. The department says that is salary we should have deducted on. Is it?
  No. The Supreme Court held that a tip is not salary at all, and that the route it travels — cash into the waiter's hand or a card entry through the employer's bank account — makes no difference. Section 15(b) taxes what is paid or allowed by or on behalf of an employer, and the word employer presupposes a contract of employment; the employee has no vested right to claim a tip from his employer, and the amount has no reference to his contract of employment. The employer receives the money in a fiduciary capacity as trustee and is only a conduit between customer and staff. The tip is the employee's income from other sources under section 56(1). Section 192 is therefore not attracted, the employer is not an assessee in default, and no interest under section 201(1A) arises.
• Vodafone International Holdings BV v Union of India Supreme CourtHelps taxpayerSuperseded by amendment
  I am buying the shares of a foreign holding company from another non-resident, and that company's subsidiaries hold shares in an Indian company — must I withhold tax under section 195?
  No, on the law as it stood. The Supreme Court held on 20 January 2012 that what was sold was a single share in a Cayman Islands company, which is property situated outside India, in an outright sale between two non-residents on a principal to principal basis. Shares are a bundle of rights and a transfer lock, stock and barrel cannot be broken into components — control premium, non-compete, brand licence, call options — and taxed piecemeal, particularly where the parties fixed one lump sum of US$11.08 billion with no split. The Revenue established no connection with section 9(1)(i), so section 195 did not apply.
• Vodafone Idea Ltd v ACIT (Delhi HC, 2026) High CourtHelps taxpayerNo later treatment found
  The Tribunal allowed my appeal, the Assessing Officer has passed the appeal effect order and worked out the refund, but the CPC will not pay because the portal shows an outstanding demand on my PAN and on my group TANs. Is that lawful?
  No. Once an appellate authority (or the Assessing Officer giving effect to its order) finds an amount refundable, that becomes a vested and crystallised right, and the Assessing Officer or the CPC cannot withhold a rupee of it except by an order actually passed under section 245. Where the Revenue could not produce any such order, the Delhi High Court held that refusing the refund because of demands standing against the assessee's PAN and sister TANs was untenable in law, arbitrary, and violative of Articles 14, 19(1)(g) and 300A, and directed payment of Rs 53,09,56,470 with interest under sections 244A and 244A(1A) by a fixed date, with a further 1 per cent per month if the date was missed.
• CIT (International Taxation) v Nidra Hospitality Gujarat Pvt Ltd High CourtHelps taxpayerNo later treatment found
  The officer says I am in default under s.201 for not deducting under s.195 on payments abroad, although I have a Form 15CB from my chartered accountant for every remittance. Is that enough?
  On these facts, yes. The Gujarat High Court declined to admit the Revenue's appeal, holding that once the assessee had filed its TDS returns and submitted Form 15CB — the accountant's certificate on liability to deduct under Chapter XVII-B prescribed by Rule 37BB — for each remittance, and the Assessing Officer had not disputed those, the assessee could not be treated as an assessee in default under s.201. The Court also held that commission paid to travel agents and on hotel bookings made through websites and subsidiaries was not a sum covered by s.195.
• Kohinoor Educational Services Pvt Ltd v Union of India High CourtHelps departmentNo later treatment found
  I did not deduct tax on payments to a government body that has certainly paid tax on them. It will not give me the accountant's certificate in Form 26A. Can the court make it sign, and does the first proviso to s.201(1) cover my old years?
  No on both counts here. The Delhi High Court declined to issue a mandamus compelling the payee to furnish the Annexure A accountant certificate to Form 26A, and upheld the single judge's view that the first proviso to s.201(1) came into effect only on 1 July 2012 and does not reach financial years 2009-10 to 2012-13. Delay and laches - a decade after the licence ended - were an independent ground.
• CIT v Dr Balabhai Nanavati Hospital High CourtCuts both waysNo later treatment found
  After a survey the TDS officer says my consultant doctors are employees and wants 192 instead of 194J. Is he right?
  Not on these facts, and only part of the case was decided. On the doctors the High Court found no substantial question of law: they are appointed on probation for qualification and specialisation, receive no fixed monthly remuneration, are free to practise at other hospitals, get no PF or ESIC and no perquisites, attend according to patients' needs, and the hospital exercises no real supervisory control; the doctors had also returned the receipts as business or professional income. The separate maintenance-contract question was not answered — the Tribunal's order on it was set aside and the matter sent back for a contract-by-contract finding, and the assessee-in-default question on that limb goes with it.
• Pune Municipal Corporation v ACIT (TDS), Pune High CourtHelps taxpayerNo later treatment found
  I have been held an assessee in default under s.201 for not deducting s.194C and s.194LA tax when I issued TDR certificates instead of paying money. Is there an answer where the payment is wholly in kind?
  The Bombay High Court found a strong prima facie case and stayed the s.201 order, the demand and the s.271C penalty notice. Its prima facie view is that the words 'or by any other mode' in s.194C and in s.194LA must be read ejusdem generis with payment in cash or by cheque or draft, so those sections do not operate where the payment is made in kind by issuing transferable development rights. The court drew support for that reading from s.194B and s.194R, which do contain express machinery for a benefit paid wholly in kind and which is conspicuously absent from s.194C and s.194LA.
• CIT (TDS)-2 v Santur Builders Pvt Ltd High CourtHelps taxpayerNo later treatment found
  The AO says our EDC paid to HUDA was 'rent' and has raised a s.201 demand for not deducting under s.194-I. Is that right?
  No. External Development Charges paid to the Haryana authority are not rent, so s.194-I is not attracted and a s.201(1)/201(1A) order built on s.194-I cannot stand. The Delhi High Court dismissed the Revenue's appeal, holding the point squarely covered by its own earlier decision in DLF Homes Panchkula. It also refused to let the Revenue rescue the order by switching to s.194C at the appeal stage, because s.194C was never the case the AO made.
• All India Central Bank Officers Federation v Union of India High CourtHelps departmentNo later treatment found
  My client is a bank officer taxed on a deemed concession in rent for the bank's quarters even though the market rent is lower than the percentage of salary applied. Is the deeming provision open to challenge?
  Not on the grounds run so far. A Division Bench of the Bombay High Court dismissed a batch of writ petitions by bank officers' associations challenging Explanations 1 to 4 below s.17(2) inserted by the Finance Act 2007 with limited retrospective effect. It held the legal fiction is not an impermissible legislative override of Arun Kumar v Union of India, that the retrospectivity is valid, and that classifying by city population and measuring the concession as a percentage of salary does not offend Article 14.
• Sree Metaliks Limited v Union of India High CourtHelps taxpayer
  We deposited the TDS late, with interest, and the Department accepted it — then launched a s.276B prosecution against the company and its directors. Can the complaint be quashed?
  On this judgment, yes, where the delay is explained. The Orissa High Court quashed a s.276B read with s.278B prosecution for delays of between 15 and 394 days in FY 2019-20, holding the delay well explained by the company's insolvency resolution process and the COVID-19 restrictions, and noting that the prosecution had been launched only after the Department had received the TDS along with interest. It followed the Jharkhand High Court in Dev Multicom and its own earlier decision in D.N. Homes.
• Puri Constructions Pvt Ltd v Addl CIT High CourtHelps departmentNo later treatment found
  I paid External Development Charges to HUDA/HSVP because the Town and Country Planning Department told me to. I have no contract with HUDA. Does s.194C still oblige me to deduct tax at source?
  Yes. The Delhi High Court rejected the developers' challenge and held that EDC payments fall within s.194C. The privity argument does not work: s.194C looks for a contract under which the contractor carries out work, not for a contract between the payer and the payee. Nor does s.196 rescue the developer, because HSVP is a legal entity distinct from the Government of Haryana. This is a different question from the one decided in DLF Homes Panchkula, which held EDC is not 'rent' under s.194-I. The two decisions sit side by side and do not conflict.
• CIT v Lalitpur Power Generation Co Ltd High CourtHelps taxpayerNo later treatment found
  My plant erection contract includes testing and commissioning. Can the AO carve that out and demand 194J?
  No. Where testing and commissioning form part of an indivisible contract for setting up a thermal power plant, the payments fall under s.194C as work; the consideration cannot be fragmented to create a fees-for-technical-services component under s.194J.
• DLF Homes Panchkula Pvt Ltd v JCIT High CourtHelps taxpayer
  Are External Development Charges paid to HUDA 'rent' under s.194-I? And if the AO picked the wrong section, can the department switch sections on appeal?
  EDC paid to the Haryana authority under the statutory licensing scheme is not rent, so s.194-I is not attracted. The Revenue did not even try to defend the Assessing Officer's reasoning; it asked instead for a remand so the officer could apply s.194C. The Court refused. An order under s.201 stands or falls on the reasoning the officer actually gave, and the reasoning here was fundamentally flawed. The s.201(1) and 201(1A) demands were set aside.
• PCIT v Future First Info Services P Ltd High CourtHelps taxpayerHigh Courts differ
  The AO says I short-deducted TDS on director remuneration. Can he disallow the payment under 40(a)(ia)?
  No. The Delhi High Court held that where there is short deduction of tax at source, disallowance cannot be made under s.40(a)(ia) and the correct course open to the officer is to invoke s.201.
• Kartik Vijaysinh Sonavane v DCIT High CourtHelps taxpayer
  My employer deducted TDS from my salary and never deposited it. The portal shows nothing in 26AS, I do not even have Form 16 for one of the years, and the department has adjusted my later refunds against the demand. Can they do that?
  No. Where the employer has in fact deducted the tax, the department is precluded from denying the deductee credit for it, and any recovery or adjustment already made must be refunded with statutory interest. The absence of the entry in the departmental system, and the absence of a Form 16 for one of the years, were both raised by the Revenue and neither saved the demand.
• Hosmat Hospital P Ltd v ACIT High CourtCuts both waysNo later treatment found
  I engage salaried doctors, in-house consultants and visiting consultants. Can the officer treat them all alike?
  No — but you get a rehearing, not a finding. The Karnataka High Court set aside the Tribunal order treating the hospital as an assessee in default and remitted the matter, holding that the AO must reconsider the question with attention to the hospital's incentive policy and the returns the doctors actually filed.
• CIT v Biocon Ltd High CourtHelps taxpayer
  My company issued shares to employees under an ESOP at below market price. Can we deduct the discount, even though no cash went out?
  Yes, on this decision. The Karnataka High Court held that the discount on issue of shares under an employees stock option plan - the difference between the market price on the date of grant and the offer price - is allowable under section 37(1). Section 37(1) permits deduction of expenditure laid out or expended and does not require a payout, nor does it envisage expenditure in cash; expenditure includes a loss. Because the options vest at 25 per cent a year, the liability arises in the accounting year and only its quantification is deferred, so it is an ascertained and not a contingent liability. The Revenue's appeal was dismissed.
• Tirunelveli District Central Co-op Bank v JCIT High CourtHelps taxpayerPartly overruled — read this first
  Must I deduct under 194N on cash withdrawals that are not the account holder's income?
  No. Section 194N requires a sum to be deducted 'as income-tax', and income-tax is a levy on income — where no income results, there is no levy, and the TDS machinery is not itself a charging provision. The bank must be allowed to lead evidence that the payee bore no tax liability on the sum withdrawn.
• CIT (TDS) v Oil and Natural Gas Corporation Ltd High CourtHelps taxpayer
  I am the employer. I treated the uniform allowance as exempt on my employees' self-certification and did not call for bills. The TDS officer has made me an assessee in default under s.201. Was I obliged to verify that each employee actually spent the money?
  No. The High Court held that the employer's liability under s.192 is to deduct tax to the extent of the employee's taxable income, and that where part of that income is exempt there is no liability to deduct from it. A certificate from the employee that he has incurred the expenditure is adequate for the disbursing officer when computing the tax deductible; whether the employee can in fact substantiate the claim is a matter for the employee's own assessment and has no bearing on the employer's estimate. The demand under s.201(1) and the consequential interest were rightly deleted.
• CIT v Media World Wide P Ltd High CourtHelps taxpayerNo later treatment found
  I pay uplinking and bandwidth charges for my channel. Is that 194C work or 194J technical services?
  S.194C. The Court held first that no technical service was rendered at all: a standard, automated facility that anyone may use on payment of the prescribed fee is not a service rendered to the payer, whatever equipment is involved. Only then did it turn to s.194C, whose inclusive definition of 'work' specifically includes broadcasting and telecasting. Tax was rightly deducted under s.194C and there was no short deduction.
• Pr. CIT v Shivpal Singh Chaudhary High CourtHelps taxpayerJudgment not reachable
  The relief where the payee has paid the tax came in from 2013. Can I use it for an earlier year?
  Yes. The Punjab & Haryana High Court held the second proviso to s.40(a)(ia) declaratory and curative, and therefore retrospective from 1 April 2005, so where the resident payee has offered the income in its return and paid tax, no disallowance can be made.
• Pr CIT v Bharat Heavy Electricals Ltd High CourtHelps taxpayer
  Our erection and commissioning contractor uses its own engineers. Should we deduct under 194J, not 194C?
  No. Payments for construction, erection and commissioning of a plant do not become fees for technical services merely because the contractor deploys technical personnel to perform its contract; deduction under s.194C is correct.
• Ghaziabad Development Authority v Union of India High CourtCuts both ways
  I failed to deduct TDS and the department has raised a demand on me for the tax itself plus surcharge under section 201. Can it do that?
  No, not on this judgment. The Allahabad High Court held that section 201 by itself imposes only interest under sub-section (1A) and penalty under sub-section (1); it carries no provision letting an income-tax authority demand the amount of TDS, or the tax, from a person who failed to deduct, unless the case answers section 201(2), where tax was deducted but not paid over. Surcharge on a TDS amount was struck down as well, tax deductible at source being different from tax on total income. What survives is interest under section 201(1A), from the date the tax was deductible to the date the tax was actually paid.
• DIT (International Taxation) v. GE Packaged Power Inc. — filing a NIL return at reassessment does not make a non-resident liable to s.234B interest for a pre-2012 year High CourtHelps taxpayer
  My non-resident client filed a NIL return after a s.148 notice, the Assessing Officer found a permanent establishment and charged s.234B interest for years before 2012. Does the fact that he denied taxability defeat the s.209(1)(d) argument?
  The Delhi High Court held that it does not. For assessment years before the Finance Act, 2012 proviso, s.209(1)(d) allowed the non-resident to reduce his advance tax by the tax that was deductible at source from the remittances, whether or not it was actually deducted, so no advance tax was payable and no s.234B interest could be charged — and the Court held that this remained so 'even though they filed returns declaring NIL income at the stage of reassessment'. It read the earlier decision in DIT v. Alcatel Lucent USA Inc. as turning on that assessee's initial denial of permanent establishment status followed by its volte face admitting it, not on the mere filing of a NIL return.
• Jagran Prakashan Ltd v DCIT (TDS) High CourtHelps taxpayer
  I publish a newspaper and allow accredited advertising agencies the standard 15 per cent trade discount. The TDS officer says that is commission under section 194H and has raised a demand on me. Is that right?
  No, on the reasoning available in this judgment. The Allahabad High Court held that section 194H applies only where the recipient acts on behalf of the payer, and here there was no agreement between the newspaper and the advertising agencies and no agency had ever been appointed. The Kerala decision in Director, Prasar Bharati, on which the department relied, turned on a written agency agreement containing an express clause about withholding tax, and was held to be inapplicable. The Delhi High Court had already decided the same question against the department in Living Media India, and the Supreme Court had dismissed the department's special leave petition against it on 11 December 2009.
• Yashpal Sahni v Rekha Hajarnavis, ACIT High CourtHelps taxpayer
  My employer deducted TDS from my salary, never paid it to the Government and never gave me a Form 16. The Department is now recovering that tax from me. Can it?
  No. The Bombay High Court held that section 205 bars a direct demand on the assessee to the extent tax has been deducted at source, and the bar operates the moment deduction is established. Whether the deductor paid the money over, and whether a Form 16 was issued, are both irrelevant to the bar. The Act gives the Department complete machinery against the deductor - section 201 default, interest, a charge on its assets, penalty under section 221 and prosecution under section 276B - and that is the only route open. Rs 17,89,587 recovered by attaching the employee's bank account was ordered refunded with interest at six per cent.
• Anusuya Alva v DCIT High CourtHelps taxpayer
  My tenant deducted tax from my rent but never paid it over or gave me a Form 16A. The department is now recovering it from me - can it?
  No. The Karnataka High Court quashed the demand to that extent. Section 205 bars a direct demand on the assessee to the extent tax has been deducted from her income, and the section says nothing about the deducted tax having been remitted. The word deduct in section 205 cannot be read as deducted and remitted. The person deducting acts as an agent of the Revenue under a statutory compulsion the payee cannot resist, so his default cannot be visited on her. The Revenue must recover from the deductor, and was restrained from enforcing the demand against the landlord by any coercive method.
• ACIT v Om Prakash Gattani High CourtCuts both ways
  The deductor deducted my tax and never deposited it. The Assessing Officer says he cannot give me credit until the money reaches the treasury, and has attached my bank account. Is he right on both counts?
  He may be right on the first and is wrong on the second. This is the foundational decision holding that s.205 bars any recovery from the deductee once tax has in fact been deducted, whether or not the deductor paid it over - the garnishee notices under s.226(3) were quashed - while at the same time holding that credit under s.199 is contingent on the tax being paid to the Central Government, so the Assessing Officer's note withholding credit until proof of payment was allowed to stand.
• Madhu Transport Co P Ltd v ITO ITATHelps taxpayerNo later treatment found
  I never filed Form 26A, but my payee did include the amount in its return and pay tax. Is the s.40(a)(ia) disallowance still good?
  No, on these facts. The Tribunal deleted the disallowance where the recipient had offered the interest in its return and paid tax on it, applying Hindustan Coca-Cola, and held that the absence of Form 26A could not defeat the claim for a year before rule 31ACB and Form 26A existed at all.
• SME Pool Series V August 2016 v ITO (TDS) — no section 194LBC deduction on excess interest spread where the originator holds no pass-through certificates ITATHelps taxpayer
  Our securitisation trust pays excess interest spread to the originator, who met its retention requirement by cash collateral rather than by buying PTCs. Were we obliged to deduct under section 194LBC?
  No, on the Mumbai Tribunal's reasoning. Section 194LBC applies only where income is payable to an 'investor' in respect of an investment in the securitisation trust, and 'investor' is defined in clause (a) of the Explanation after section 115TCA as a holder of a securitised debt instrument, securities or a security receipt ISSUED BY the trust — a deed of assignment, by which the trust acquires the receivables, is not such an instrument. The originator here had subscribed to no pass-through certificates and had met its Minimum Retention Requirement by cash collateral and by collateralising excess receivables, so neither condition in the section was satisfied, and the demands of Rs. 4,21,30,230 under section 201(1) and Rs. 47,22,191 under section 201(1A) were deleted.
• DDE ORG Systems (P) Ltd v ACIT (TDS) ITATHelps departmentNo later treatment found
  We pay our staff a fixed monthly attire allowance and washing allowance and treat it as exempt under s.10(14). Nobody actually wears a uniform. Can the TDS officer make us an assessee in default?
  Yes. The Tribunal held that Rule 2BB(1)(f) exempts expenditure incurred on the purchase or maintenance of a uniform for wear during the performance of duties, and that where the employees wore dress of different colour, different design and texture according to their own choice, there was no uniform and nothing to show the allowance was granted to meet expenses wholly, necessarily and exclusively incurred in the performance of duties. Tax was required to be deducted on both the attire allowance and the washing allowance, and the employer was in default under s.201(1).
• Meridian Telesoft Ltd v ACIT ITATHelps taxpayerJudgment not reachable
  What proof do I need that my payee declared the income and paid tax, to get the disallowance deleted?
  A chartered accountant's certificate showing the payee included the amount in its return and paid tax on it was accepted as sufficient. Once the payer is not deemed an assessee in default under the first proviso to s.201(1), s.40(a)(ia) is deemed to have been complied with and the disallowance goes.
• Statutory position — sections 115TCA and 194LBC: the securitisation trust pass-through, and the flat ten per cent withholding from 1 April 2025 CBDT Circulars & InstructionsCuts both ways
  Our securitisation trust is distributing to PTC holders. Do we still deduct at twenty-five or thirty per cent, and who is taxed on the trust's income?
  No — with effect from 1 April 2025 the Finance Act 2025 substituted the rate in section 194LBC(1) with a flat ten per cent for every resident investor, replacing the earlier twenty-five per cent for an individual or Hindu undivided family and thirty per cent for anyone else; for a non-resident (not being a company) or a foreign company the rate remains 'the rates in force' under sub-section (2). On the charge itself, section 115TCA taxes the income of a securitisation trust in the hands of its investor as if the investments had been made by him directly, with the income retaining its nature and proportion, and deems undistributed income to have been credited to the investor on the last day of the previous year.
• Statutory position — s.194B: winnings from lottery, crossword puzzle, card games, gambling and betting, and the move to a per-transaction threshold CBDT Circulars & InstructionsCuts both ways
  The lottery agent deducted tax on a five thousand rupee prize because my winnings for the year crossed ten thousand. Was he right, and does it depend on which year the prize was paid?
  It depends entirely on the year. As s.194B stands from 1 April 2025, the threshold is ten thousand rupees in respect of a SINGLE TRANSACTION: the words 'or the aggregate of amounts' were substituted by 'in respect of a single transaction', and the words 'during the financial year' were omitted, both by Act No. 7 of 2025 with effect from 1 April 2025. Immediately before that the section worked on the amount or the aggregate of amounts exceeding ten thousand rupees during the financial year, so a payer had to add up a claimant's winnings across the year; and where the winning is wholly or partly in kind and the cash part is not enough to meet the tax, the payer must, before releasing the winnings, ensure that tax has been paid.
• Statutory position — s.200A: the CPC computes tax, interest and the s.234E fee on a TDS statement and issues an intimation CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  CPC has sent me an intimation under section 200A with a late fee on it. What does section 200A actually let them compute, when did the fee limb go in, and can I appeal it?
  Section 200A is the machinery for processing a quarterly TDS statement under the Income-tax Act, 1961. Sub-section (1) runs (a) to (f): correct arithmetical errors and incorrect claims apparent from the statement, compute interest, compute the fee under section 234E, determine the sum payable or the refund, send an intimation, and grant the refund. The fee limb is clause (c), and the old clauses (c), (d) and (e) became (d), (e) and (f) when section 52 of the Finance Act, 2015 substituted clauses (c) to (f) for clauses (c) to (e) with effect from 1 June 2015 — so a submission that still calls the intimation clause (d) or the refund clause (e) is describing the law before that date. Under the 1961 Act the intimation cannot be sent after one year from the end of the financial year in which the statement is filed, and that limit sits in the proviso to sub-section (1), not in sub-section (2); under the successor provision, section 399 of the Income-tax Act, 2025, the same one-year limit is sub-section (2) itself. The intimation is deemed a notice of demand under the proviso to section 156, is appealable to the Commissioner (Appeals) under section 246A(1)(a), and can be rectified under section 154(1)(c). Whether a section 234E fee can be charged in a section 200A intimation for a quarter before 1 June 2015 is the point on which the High Courts have split — Karnataka and Kerala for the deductor, Gujarat, Rajasthan and Madras for the Revenue — and which High Court you are in decides it.
• Statutory position — s.201: who is deemed an assessee in default, the Form 26A escape that covers non-deduction only, one per cent and one and one-half per cent for two different periods, and the six-year limit from 1 April 2025 CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  The TDS officer has passed an order under section 201 treating me as an assessee in default and has added interest under section 201(1A). Who exactly is in default, what gets me out of it, which interest rate runs for which period, and how far back can he go?
  Section 201(1) deems a person who does not deduct, does not pay, or after deducting fails to pay the whole or any part of the tax to be an assessee in default in respect of that tax. Its first proviso takes him out of that deeming, but only for a failure to deduct, and only if the payee has furnished his return under section 139, has taken the sum into account in computing income in that return and has paid the tax due on the income declared — and the deductor furnishes a certificate to that effect from an accountant, which rule 31ACB requires in Form 26A. Interest under section 201(1A) runs at two rates for two different periods: one per cent for every month or part of a month from the date the tax was deductible to the date it was deducted, and one and one-half per cent for every month or part of a month from the date it was deducted to the date it was actually paid. Where the first proviso to section 201(1) rescues the deductor from the tax, the proviso to section 201(1A) still charges the one per cent, from the date the tax was deductible to the date the payee furnished his return. Since 1 April 2025 an order under section 201(1) for a failure to deduct cannot be made after six years from the end of the financial year in which payment is made or credit is given, or two years from the end of the financial year in which a correction statement is delivered under the first proviso to section 200(3), whichever is later; until 31 March 2025 the figure was seven years and the limit protected only a failure to deduct from a person resident in India. Section 201 governs a default on a sum paid or credited up to 31 March 2026; where the earlier of credit or payment falls on or after 1 April 2026, the consequences provision is section 398 of the Income-tax Act, 2025.
• Statutory position — s.194C: one per cent for an individual or HUF and two per cent for everyone else, the thirty thousand and one lakh thresholds, and the material-bought-from-a-third-party carve-out that takes a contract outside "work" CBDT Circulars & InstructionsCuts both ways
  I pay a fabricator to make parts to my drawings and I pay lorry owners to move my goods. Do I deduct under section 194C, at what rate, and at what figure does the obligation start — is it thirty thousand rupees or one lakh?
  Both figures are live and they do different jobs. Section 194C(5) says no deduction is to be made where the single sum credited or paid does not exceed thirty thousand rupees, and its proviso says that once the aggregate of such sums in the financial year exceeds one lakh rupees you must deduct under the section anyway. So a single bill of Rs 35,000 is caught on its own, and a run of Rs 12,000 bills is caught the moment the year's total passes Rs 1,00,000. The rate is one per cent where the payee is an individual or a Hindu undivided family and two per cent in every other case. Whether the fabrication is "work" at all depends on whose material is used: manufacturing to your specification out of material bought from you (or from an associate of yours) is "work"; the same job done out of material the fabricator bought from anyone else is expressly excluded, and that exclusion is the line between section 194C and a contract for sale. All of this is the 1961 Act, which the CBDT's own transition FAQ says stands repealed on 1 April 2026: for a credit or payment on or after that date the corresponding provision is section 393(1) of the Income-tax Act, 2025, which carries the same rates and the same two figures.
• CBDT MAP Guidance 2022 CBDT Circulars & InstructionsCuts both waysNo later treatment found
  You have a transfer pricing adjustment that also bites your associated enterprise abroad. Can you run MAP and the domestic appeal together, and what closes the MAP down?
  You can run both. India follows a liberal regime and permits appeal and MAP proceedings to be pursued simultaneously, which many treaty partners do not. But a final ITAT order on the merits for the same year ends it: the competent authorities will not deviate from that order, the MAP is closed as resolved by a domestic remedy, and India then asks the treaty partner for correlative relief. Access is refused altogether in a defined set of cases, and there are fixed clocks for accepting a MAP outcome and for the officer to give effect to it.
• Statutory position — s.209(1)(d) and its proviso: credit against advance tax for tax deductible but not actually deducted CBDT Circulars & InstructionsCuts both ways
  My client is a payee whose income should have suffered TDS but the payer deducted nothing. Can he still reduce his advance tax by that tax when computing his liability, and does it matter which year it is?
  It depends entirely on which side of 1 April 2012 the financial year falls. Clause (d) of s.209(1) reduces the income-tax computed under clause (a), (b) or (c) by 'the amount of income-tax which would be deductible or collectible at source during the said financial year' on income taken into account in the computation — words wide enough to cover tax that was deductible but never deducted; but the proviso inserted in clause (d) by s.83 of the Finance Act, 2012 removes that reduction where 'the person responsible for deducting tax has paid or credited such income without deduction of tax', so from the financial year 2012-13 onwards a payee who was in fact paid gross cannot use the deductible-but-not-deducted amount to wipe out his advance tax.
• DIT (International Taxation) v. Alcatel Lucent USA Inc. — the 'volte face' ground for charging s.234B interest on a non-resident, and its reversal by the Supreme Court High CourtHelps departmentOverruled
  The Assessing Officer is relying on the Delhi High Court's Alcatel Lucent judgment to charge my non-resident client s.234B interest because it first denied a permanent establishment and then accepted the assessment. Is that judgment still good?
  It is not. The Delhi High Court did hold, on 7 November 2013, that where a non-resident first denies that it has a permanent establishment and then accepts its tax liability at the first appellate stage, it must take responsibility for its volte face and cannot shift the blame for non-deduction to the Indian payers, so s.234B interest was payable; it answered the question of law in favour of the Revenue and allowed the appeals. But the assessees' special leave petitions were entertained, and in the Supreme Court's judgment of 17 September 2021 in the Mitsubishi Corporation batch the Court, having set out the Alcatel Lucent history at paragraph 23, recorded at paragraph 25: 'Accordingly, these Civil Appeals are allowed.'

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.