Recovery through State Government
[Section-417 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
If the recovery of tax in any area has been entrusted to a State Government under article 258(1) of the Constitution, the State Government may direct, with respect to that area or any part thereof that tax shall be recovered therein with, and as an addition to, any municipal tax or local rate, by the same person and in the same manner as the municipal tax or local rate is recovered.
FAQs on Section 417 of Income Tax Act 2025
What is the main provision under Section 417 of the Income Tax Act, 2025?
Section 417 allows the State Government, if authorized under Article 258(1) of the Constitution, to recover income tax along with any municipal tax or local rate using the same mechanism and personnel.
When does Section 417 of the Income Tax Act, 2025 come into effect?
It comes into effect from 1st April, 2026.
What does Article 258(1) of the Constitution refer to in this context?
Article 258(1) permits the Central Government to entrust functions to the State Government, enabling it to act on behalf of the Union for specific matters like tax recovery.
How can tax be recovered under Section 417?
Tax can be recovered as an addition to municipal taxes or local rates, by the same person and in the same manner as those taxes are collected.
Is this provision applicable throughout the country?
No, it is applicable only in areas where the recovery of income tax has been entrusted to a State Government under Article 258(1).
Can the State Government decide the manner of recovery under this section?
Yes, the State Government may direct that the tax shall be recovered in the same manner as municipal taxes or local rates, within the entrusted area.
Does this section create a new recovery mechanism?
No, it leverages the existing municipal or local recovery mechanisms for tax recovery by integrating income tax collection into those systems.
Who performs the recovery of tax under Section 417?
The same person who recovers municipal tax or local rate will recover income tax in the specified area.
Is the recovery under this section treated differently from normal income tax recovery?
Yes, in the specified areas, income tax is recovered as an addition to municipal tax or local rate, making the process more integrated at the local level.
Can the Central Government recover taxes directly if entrusted to a State Government?
Once the recovery is entrusted to a State Government under Article 258(1), the State handles the recovery as per Section 417, unless there is a change in the entrustment arrangement.
Does this section override other recovery procedures under the Act?
It applies specifically to the areas entrusted to the State Government and complements existing procedures rather than overriding them.
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