Right of representative assessee to recover tax paid
[Section-305 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 305(1) of Income Tax Act 2025
305(1) Every representative assessee who, as such, pays any sum under this Act, shall be entitled to recover the sum so paid from the person on whose behalf it is paid, or to retain out of any moneys that may be in his possession or may come to him in his representative capacity, an amount equal to the sum so paid.
Section 305(2) of Income Tax Act 2025
305(2) Any representative assessee, or any person who apprehends that he may be assessed as a representative assessee, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (herein referred to as the principal), a sum equal to his estimated liability under this Chapter.
Section 305(3) of Income Tax Act 2025
305(3) In the event of any disagreement between such principal and such representative assessee or person with regard to the amount to be so retained as referred to in sub-section (2), such representative assessee or person may secure from the Assessing Officer a certificate stating the amount to be so retained pending final settlement of the liability, and the certificate so obtained shall be his warrant for retaining that amount.
Section 305(4) of Income Tax Act 2025
305(4) The amount recoverable from such representative assessee or person shall not exceed the amount specified in such certificate, except to the extent to which such representative assessee or person may at such time have in his hands additional assets of the principal.
FAQs on Section 305 of Income Tax Act 2025
Who is considered a representative assessee under Section 305?
A representative assessee is a person who is responsible under the Act to pay tax on behalf of another individual, known as the principal.
Can a representative assessee recover the tax amount paid from the principal?
Yes, under Section 305(1), a representative assessee is entitled to recover the sum paid on behalf of the principal or retain an equivalent amount from any money in their possession in the representative capacity.
Is a representative assessee allowed to retain funds in anticipation of tax liability?
Yes, Section 305(2) allows any representative assessee, or anyone who expects to be assessed as one, to retain out of any payable money to the principal, a sum equal to their estimated tax liability.
What happens if there is a disagreement between the representative assessee and the principal on the amount to be retained?
If a disagreement arises, Section 305(3) provides that the representative assessee may request a certificate from the Assessing Officer specifying the amount to be retained. This certificate serves as a legal warrant to retain that amount.
Can the representative assessee retain more than the amount mentioned in the certificate?
According to Section 305(4), the representative assessee cannot retain more than the amount specified in the certificate unless they possess additional assets of the principal at that time.
What is the purpose of the certificate issued under Section 305(3)?
The certificate serves as an official authorization for the representative assessee to retain the specified amount from funds payable to the principal, until the final liability is determined.
Does the representative assessee need prior approval before retaining amounts under Section 305(2)?
No prior approval is needed to retain estimated liability amounts under Section 305(2), but a certificate may be obtained in case of disputes.
Is the certificate issued by the Assessing Officer binding?
Yes, the certificate under Section 305(3) is binding and acts as a legal warrant for retention of the amount specified therein.
Can a person not yet assessed as a representative assessee also retain funds?
Yes, even if a person only apprehends being assessed as a representative assessee, they may retain funds under Section 305(2) to cover estimated liabilities.
What limits the amount that can be recovered from a representative assessee?
The limit is the amount stated in the certificate under Section 305(3), unless the representative assessee has additional assets of the principal, per Section 305(4).
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