Section 162 — Right of Representative Assessee to Recover Tax Paid
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Live. Part B of Chapter XV. The indemnity/retention limb of the representative-assessee scheme.
Subject: A representative assessee who pays any sum under the Act is entitled to recover it from the person on whose behalf it is paid, or to retain an equivalent sum out of moneys in his hands; and he may secure from the Assessing Officer a certificate of the amount to be retained pending final settlement.
Finance Act, 2026: No change. Chapter XV is untouched by the Finance Act, 2026; the section stands as amended up to the Finance Act, 2025.
A. SECTION COMMENTARY
1. A self-operating indemnity provision
Section 162 completes the representative-assessee scheme by protecting the representative. Having been made liable under section 161 for tax on income that is not his own beneficially, the representative is given, by section 162, a statutory right to be made whole: he may recover the sum paid from the person represented, or retain out of any moneys of that person in (or coming into) his hands a sum equal to his liability. To avoid disputes about quantum, sub-section (2) allows him to obtain from the Assessing Officer a certificate of the amount to be retained pending final settlement, and that certificate is, in any dispute, conclusive evidence of what may be retained.
The provision is the indemnity counterpart of the liability in section 161 and the recovery remedies in section 167; it is also the source from which section 169 draws the executor's corresponding right of indemnity.
2. No independent body of case law
Section 162 is, in candour, a self-operating machinery and indemnity provision that has not generated independent reported jurisprudence. It is rarely the subject of litigation because it confers a clear, mechanical right exercisable without recourse to the courts. The doctrinal home of any dispute is the general representative-assessee scheme described in the section 161 and section 166 authorities (Kamalini Khatau; the right of a representative to retain sums towards a potential liability was noted in WABCO India). No standalone section 162 authority is asserted; to do otherwise would be to invent one.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
162. (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.
(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 (hereinafter in this section referred to as the principal), a sum equal to his estimated liability under this Chapter, and in the event of any disagreement between the principal and such representative assessee or person as to the amount to be so retained, 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.
(3) The amount recoverable from such representative assessee or person at the time of final settlement 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.
C. AUTHORITIES
Candour rule. There is no reported decision turning on the merits of section 162; it is a self-operating indemnity/retention provision. The nearest governing authorities describe the representative-assessee scheme of which section 162 is the indemnity limb.
Cluster A — Cognate authority: the representative-assessee scheme
Cited as cognate, not as section 162 holdings: CIT v. Kamalini Khatau (209 ITR 101 SC) and WABCO India Ltd. v. DCIT (407 ITR 317 Mad), which describe the representative's liability and his statutory right to retain/recover sums towards a tax liability. These are set out in full under sections 161 and 166.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Finance Act, 2026 amends no section of Chapter XV of the Income-tax Act, 1961 (its Part-A amendments touch ss.92CA, 139, 140B, 144B, 144C, 147A, 148, 150, 153, 153B, 220, 222, 234, 245, 245MA, 254 and 270A-276 only). Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.
CHAPTER XV — LIABILITY IN SPECIAL CASES
Section 162 — Right of Representative Assessee to Recover Tax Paid
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Live. Part B of Chapter XV. The indemnity/retention limb of the representative-assessee scheme.
Subject: A representative assessee who pays any sum under the Act is entitled to recover it from the person on whose behalf it is paid, or to retain an equivalent sum out of moneys in his hands; and he may secure from the Assessing Officer a certificate of the amount to be retained pending final settlement.
Finance Act, 2026: No change. Chapter XV is untouched by the Finance Act, 2026; the section stands as amended up to the Finance Act, 2025.
A. SECTION COMMENTARY
1. A self-operating indemnity provision
Section 162 completes the representative-assessee scheme by protecting the representative. Having been made liable under section 161 for tax on income that is not his own beneficially, the representative is given, by section 162, a statutory right to be made whole: he may recover the sum paid from the person represented, or retain out of any moneys of that person in (or coming into) his hands a sum equal to his liability. To avoid disputes about quantum, sub-section (2) allows him to obtain from the Assessing Officer a certificate of the amount to be retained pending final settlement, and that certificate is, in any dispute, conclusive evidence of what may be retained.
The provision is the indemnity counterpart of the liability in section 161 and the recovery remedies in section 167; it is also the source from which section 169 draws the executor's corresponding right of indemnity.
2. No independent body of case law
Section 162 is, in candour, a self-operating machinery and indemnity provision that has not generated independent reported jurisprudence. It is rarely the subject of litigation because it confers a clear, mechanical right exercisable without recourse to the courts. The doctrinal home of any dispute is the general representative-assessee scheme described in the section 161 and section 166 authorities (Kamalini Khatau; the right of a representative to retain sums towards a potential liability was noted in WABCO India). No standalone section 162 authority is asserted; to do otherwise would be to invent one.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
162. (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.
(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 (hereinafter in this section referred to as the principal), a sum equal to his estimated liability under this Chapter, and in the event of any disagreement between the principal and such representative assessee or person as to the amount to be so retained, 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.
(3) The amount recoverable from such representative assessee or person at the time of final settlement 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.
C. AUTHORITIES
Candour rule. There is no reported decision turning on the merits of section 162; it is a self-operating indemnity/retention provision. The nearest governing authorities describe the representative-assessee scheme of which section 162 is the indemnity limb.
Cluster A — Cognate authority: the representative-assessee scheme
Cited as cognate, not as section 162 holdings: CIT v. Kamalini Khatau (209 ITR 101 SC) and WABCO India Ltd. v. DCIT (407 ITR 317 Mad), which describe the representative's liability and his statutory right to retain/recover sums towards a tax liability. These are set out in full under sections 161 and 166.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Finance Act, 2026 amends no section of Chapter XV of the Income-tax Act, 1961 (its Part-A amendments touch ss.92CA, 139, 140B, 144B, 144C, 147A, 148, 150, 153, 153B, 220, 222, 234, 245, 245MA, 254 and 270A-276 only). Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.