CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 204 — Meaning of 'Person Responsible for Paying' (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live. The definition that locates the deduction obligation.
Finance Act, 2026: No amendment.
Mechanism: Defines the 'person responsible for paying' for each class of payer (payer generally; designated officer for Government; company and principal officer; payer/authorised person for non-residents).
Litigation profile: Definitional. Litigated only within default/prosecution proceedings — the candour rule applies.
A. SECTION COMMENTARY
Section 204 is the definition provision that identifies the 'person responsible for paying' — the person on whom the deduction obligation actually falls under the foregoing sections of the Chapter. For most payments it is the payer himself; in the case of payments by or on behalf of the Government, it is the drawing and disbursing officer or other designated authority; in the case of a company, it is the company itself and, additionally (for the purposes of default and prosecution), the principal officer; and in the case of credit/payment to a non-resident, it is the payer or the authorised person. By fixing identity, section 204 makes the deduction obligations operative and locates responsibility for default.
Why the definition matters
Because the consequences of failure (sections 201, 271C, 276B) attach to the 'person responsible for paying', the section 204 identification is the necessary first step in any default proceeding: the Revenue must fasten the obligation on the right person. For companies and Government bodies, the section also identifies the individual officer who may be proceeded against, which is significant for the personal liability and prosecution provisions.
A definitional provision — candour
Section 204 is definitional and is rarely litigated on its own terms; disputes about who is the person responsible arise within section 201/276B proceedings. In candour, there is no separate body of section 204 merits authority.
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
204. For the purposes of the foregoing provisions of this Chapter and section 285, the expression "person responsible for paying" means—
(i) in the case of payments of income chargeable under the head "Salaries", other than payments by the Central Government or the Government of a State, the employer himself or, if the employer is a company, the company itself, including the principal officer thereof;
(ii) in the case of payments of income chargeable under the head "Interest on securities", other than payments made by or on behalf of the Central Government or the Government of a State, the local authority, corporation or company, including the principal officer thereof;
(iia) in the case of any sum payable to a non-resident Indian, being any sum representing consideration for the transfer by him of any foreign exchange asset, which is not a short-term capital asset, the authorised person responsible for remitting such sum to the non-resident Indian or for crediting such sum to his Non-resident (External) Account maintained in accordance with the Foreign Exchange Management Act, 1999 (42 of 1999), and any rules made thereunder;
(iib) in the case of furnishing of information relating to payment to a non-resident, not being a company, or to a foreign company of any sum, whether or not chargeable under the provisions of this Act, the payer himself, or, if the payer is a company, the company itself including the principal officer thereof;
(iii) in the case of credit, or, as the case may be, payment of any other sum chargeable under the provisions of this Act, the payer himself, or, if the payer is a company, the company itself including the principal officer thereof;
(iv) in the case of credit, or as the case may be, payment of any sum chargeable under the provisions of this Act made by or on behalf of the Central Government or the Government of a State, the drawing and disbursing officer or any other person, by whatever name called, responsible for crediting, or as the case may be, paying such sum;
(v) in the case of a person not resident in India, the person himself or any person authorised by such person or the agent of such person in India including any person treated as an agent under section
163.
Explanation.—For the purposes of this section,—
(a) "non-resident Indian" and "foreign exchange asset" shall have the meanings assigned to them in Chapter XII-A;
(b) "authorised person" shall have the meaning assigned to it in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).
C. AUTHORITIES
Candour rule observed: section 204 is a definitional provision litigated through the default/prosecution sections. The statutory scheme is offered.
Statutory backdrop — identifying the obligated person
Who is the 'person responsible for paying'
Principle: Section 204 identifies the obligated person — the payer generally; the designated officer for Government payments; the company (and its principal officer) for company payments; the payer/authorised person for payments to non-residents. The default and prosecution consequences attach to that person.
Use: The threshold identification in any section 201/271C/276B proceeding.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 204 — Meaning of 'Person Responsible for Paying' (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live. The definition that locates the deduction obligation.
Finance Act, 2026: No amendment.
Mechanism: Defines the 'person responsible for paying' for each class of payer (payer generally; designated officer for Government; company and principal officer; payer/authorised person for non-residents).
Litigation profile: Definitional. Litigated only within default/prosecution proceedings — the candour rule applies.
A. SECTION COMMENTARY
Section 204 is the definition provision that identifies the 'person responsible for paying' — the person on whom the deduction obligation actually falls under the foregoing sections of the Chapter. For most payments it is the payer himself; in the case of payments by or on behalf of the Government, it is the drawing and disbursing officer or other designated authority; in the case of a company, it is the company itself and, additionally (for the purposes of default and prosecution), the principal officer; and in the case of credit/payment to a non-resident, it is the payer or the authorised person. By fixing identity, section 204 makes the deduction obligations operative and locates responsibility for default.
Why the definition matters
Because the consequences of failure (sections 201, 271C, 276B) attach to the 'person responsible for paying', the section 204 identification is the necessary first step in any default proceeding: the Revenue must fasten the obligation on the right person. For companies and Government bodies, the section also identifies the individual officer who may be proceeded against, which is significant for the personal liability and prosecution provisions.
A definitional provision — candour
Section 204 is definitional and is rarely litigated on its own terms; disputes about who is the person responsible arise within section 201/276B proceedings. In candour, there is no separate body of section 204 merits authority.
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
204. For the purposes of the foregoing provisions of this Chapter and section 285, the expression "person responsible for paying" means—
(i) in the case of payments of income chargeable under the head "Salaries", other than payments by the Central Government or the Government of a State, the employer himself or, if the employer is a company, the company itself, including the principal officer thereof;
(ii) in the case of payments of income chargeable under the head "Interest on securities", other than payments made by or on behalf of the Central Government or the Government of a State, the local authority, corporation or company, including the principal officer thereof;
(iia) in the case of any sum payable to a non-resident Indian, being any sum representing consideration for the transfer by him of any foreign exchange asset, which is not a short-term capital asset, the authorised person responsible for remitting such sum to the non-resident Indian or for crediting such sum to his Non-resident (External) Account maintained in accordance with the Foreign Exchange Management Act, 1999 (42 of 1999), and any rules made thereunder;
(iib) in the case of furnishing of information relating to payment to a non-resident, not being a company, or to a foreign company of any sum, whether or not chargeable under the provisions of this Act, the payer himself, or, if the payer is a company, the company itself including the principal officer thereof;
(iii) in the case of credit, or, as the case may be, payment of any other sum chargeable under the provisions of this Act, the payer himself, or, if the payer is a company, the company itself including the principal officer thereof;
(iv) in the case of credit, or as the case may be, payment of any sum chargeable under the provisions of this Act made by or on behalf of the Central Government or the Government of a State, the drawing and disbursing officer or any other person, by whatever name called, responsible for crediting, or as the case may be, paying such sum;
(v) in the case of a person not resident in India, the person himself or any person authorised by such person or the agent of such person in India including any person treated as an agent under section
163.
Explanation.—For the purposes of this section,—
(a) "non-resident Indian" and "foreign exchange asset" shall have the meanings assigned to them in Chapter XII-A;
(b) "authorised person" shall have the meaning assigned to it in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).
C. AUTHORITIES
Candour rule observed: section 204 is a definitional provision litigated through the default/prosecution sections. The statutory scheme is offered.
Statutory backdrop — identifying the obligated person
Who is the 'person responsible for paying'
Principle: Section 204 identifies the obligated person — the payer generally; the designated officer for Government payments; the company (and its principal officer) for company payments; the payer/authorised person for payments to non-residents. The default and prosecution consequences attach to that person.
Use: The threshold identification in any section 201/271C/276B proceeding.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.