Penalty for failure to collect tax at source
[Section-449 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 449(1) of Income Tax Act 2025
449(1) If any person fails to collect the whole or in part, the tax as required under Chapter XIX-B, the Assessing Officer may impose on him, a penalty equal to the tax which such person failed to collect.
FAQs on Section 449 of Income Tax Act 2025
What is the penalty under Section 449(1) of the Income Tax Act, 2025?
If a person fails to collect the whole or part of the tax as required under Chapter XIX-B, the Assessing Officer may impose a penalty equal to the amount of tax that was not collected.
When does Section 449(1) become effective?
Section 449(1) is effective from 1st April, 2026.
Who has the authority to impose the penalty under Section 449(1)?
The Assessing Officer has the authority to impose the penalty for failure to collect tax as required.
Is the penalty under Section 449(1) automatic upon failure to collect tax?
No, the penalty is imposed by the Assessing Officer, indicating it is not automatic and subject to their assessment.
What is the quantum of penalty for not collecting tax as per Section 449(1)?
The penalty amount is equal to the amount of tax that the person failed to collect.
Does Section 449(1) apply to both partial and total failure to collect tax?
Yes, the section applies whether the failure to collect tax is in whole or in part.
Which transactions are covered under this penalty provision?
This penalty applies to transactions covered under Chapter XIX-B, which deals with tax collection at source.
Can this penalty be levied even if the tax was eventually paid by the buyer or deductee?
Section 449(1) focuses solely on the failure to collect tax; it does not provide relief based on whether the tax was later paid by the recipient.
Is there any defense or relief available against the penalty under Section 449(1)?
Section 449(1) does not specify any relief or defense. However, relief, if any, may depend on general principles or other sections of the Act not covered under this specific provision.
Does interest also apply in addition to the penalty under Section 449(1)?
Section 449(1) deals only with penalties. Interest provisions, if any, would be governed by separate sections under the Act.
Can an assessee appeal against a penalty imposed under Section 449(1)?
Yes, as with other penalties under the Act, the assessee may appeal against the penalty imposed by the Assessing Officer through the appellate mechanisms provided in the Act.
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