Section 191: Direct Payment by the Assessee in Certain Cases

Section 191 provides for situations where tax is not deducted at source (TDS) as required under other provisions (Sections 192 to 194, 194A to 194D, etc.), and the recipient (assessee) is responsible for paying the tax directly to the government.

Key Provisions

  1. Default in TDS Deduction
    • If a payer fails to deduct TDS(even though required under the law), the recipient (assessee) must pay the tax directly on such income.
    • Example: If a company pays interest without deducting TDS under Section 194A, the recipient must disclose this income and pay tax on it in their return.
  1. Tax Liability Remains with the Assessee
    • Even if TDS was supposed to be deducted but wasn’t, the tax liability does not disappear.
    • The assessee must report the income and pay tax accordingly, either through:
      • Advance tax(if applicable)
      • Self-assessment taxwhile filing ITR
  1. No Double Taxation
    • If the payer later deducts TDS (after the assessee has already paid tax), the assessee can claim a refundor adjust it against future tax liability.
  1. Interest & Penalty Implications
    • If the assessee fails to pay tax on income where TDS was not deducted, they may face:
      • Interest under Section 234A(for late filing)
      • Interest under Section 234B(for non-payment of advance tax)
      • Penalties under Section 271C(for non-deduction of TDS by the payer)

Example Scenario

  • Case: A landlord receives rent of ₹1,00,000/month, but the tenant does not deduct TDS under Section 194-IB(which mandates 5% TDS on rent above ₹50,000/month).
  • Responsibility: The landlord must report this rental incomein their ITR and pay tax directly if the tenant failed to deduct TDS.
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