Section 390: how tax is collected - TDS/TCS, advance tax and direct payment

Three modes of collection

Tax on income is payable, as per this Chapter, by way of:

• Deduction or collection at source (TDS/TCS); or
• Advance payment (advance tax); or
• Payment under Section 392(2)(a) - where an employer opts to pay tax on a non-monetary perquisite itself, without deducting it from the employee.

Timing does not depend on the assessment year

This tax is payable under the provisions of this Chapter irrespective of the fact that the assessment for the related income is to be made in a later tax year.

Nothing in this section affects the basic charge of tax on such income under Section 4(1) - Section 390 is a collection mechanism, not a separate charging provision.

Payment of tax under this Chapter is in addition to any other mode of tax recovery used to discharge the liability for income assessed for a tax year.

Credit for tax collected

Tax deducted or collected at source, or a sum paid under Section 392(2)(a), once paid to the Central Government, is treated as payment of tax on behalf of the person from whose income the tax was deducted, from whom it was collected, or in respect of whose income it was paid.

The Board may make rules for giving credit of such tax to that person - and also to a person other than that person - and for the tax year for which such credit may be given.

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