Collection, Recovery and Refund

Table of Contents

Collection

Collection refers to the process of gathering income tax payments from taxpayers.
Income tax can be collected through various methods, such as tax deduction at source (TDS), advance tax payments, self-assessment tax, and tax payments during the regular assessment process.
Tax authorities, employers, financial institutions, and other entities play a role in collecting income tax from individuals and businesses.

Section 190: This section deals with the deduction of tax at source (TDS). It specifies that the person responsible for making payments is required to deduct tax from the income at the specified rates and deposit it with the government on behalf of the recipient.
Section 191: This section allows taxpayers to make direct payment of tax on their own income without any deduction at source by the payer.
Sections 192-195: These sections provide specific provisions for the deduction of tax at source from different types of income such as salaries, interest on securities, dividends, and payments made to non-residents.

Recovery involves the efforts made by tax authorities to collect outstanding tax amounts from taxpayers who have not fulfilled their tax obligations.
If a taxpayer fails to pay their tax liability within the specified time or defaults on their tax payments, tax authorities may initiate recovery actions.
Recovery actions can include issuing notices, levying penalties and interest, attaching assets, initiating legal proceedings, and other measures to recover the unpaid taxes.

Section 220: This section imposes interest on unpaid tax amounts. If a taxpayer fails to pay their tax liability within the specified time, they may be liable to pay interest on the outstanding amount.
Section 221: This section imposes penalties for failure to pay tax or any shortfall in the payment of tax. Penalties can be levied on the amount of tax not paid or short-paid.
Section 222: This section empowers tax authorities to recover tax in cases where a taxpayer is in default. They can take various actions such as attaching and selling the taxpayer’s property to recover the outstanding tax amount.
Section 223: This section authorizes tax authorities to issue a certificate for the recovery of tax, which can be used as evidence for recovery actions.
Section 226: This section grants the Tax Recovery Officer the authority to initiate tax recovery proceedings, including the attachment and sale of the taxpayer’s assets to recover the outstanding tax amount.
Section 227: This section enables the recovery of tax through the sale of immovable property owned by the taxpayer.

Refund refers to the return of excess taxes paid by a taxpayer to the government.
When a taxpayer has paid more tax than their actual tax liability, they are eligible for a refund.
Refunds can arise due to factors such as excess TDS, advance tax payments, or tax credits.
Taxpayers can claim a refund by filing an income tax return and providing the necessary details and supporting documents.
The tax authorities review the refund claim and, if approved, initiate the process of issuing the refund amount to the taxpayer.

Section 237: This section deals with the refund of excess tax paid by taxpayers. It provides for the procedure to claim such refunds from the tax authorities.
Section 238: This section specifies the time limit within which a taxpayer can claim a refund. It is important for taxpayers to file their refund claim within the prescribed time to be eligible for a refund.
Section 239: This section outlines the procedure for claiming a refund, including the submission of a refund application to the tax authorities along with the necessary supporting documents.
Section 240: This section deals with the payment of interest on delayed refunds. If the refund is not issued within a specified time period, the taxpayer may be entitled to receive interest on the refund amount.
Section 241: This section allows for the set-off of refunds against any tax remaining payable by the taxpayer under any other assessment. The refund can be adjusted against the outstanding tax liability.
Section 243: This section mandates the grant of a refund upon completion of assessment or reassessment, after considering any tax liability of the taxpayer.
Section 244: This section provides for the payment of interest on refunds. If the refund is not issued within a specified time period, the taxpayer may be entitled to receive interest on the refund amount.