Finance Act, 2026: WHOLLY SUBSTITUTED w.e.f. 1 March 2026 — graded-threshold structure; rigorous imprisonment and mandatory minimum removed (see amendment note).
Mechanism: Punishes a collector who fails to pay to the credit of the Central Government the tax collected at source under section 206C within the prescribed time.
Litigation profile: Sparse in its own right; governed by the section 276B (TDS) jurisprudence applied mutatis mutandis.
Section 276BB is to tax collected at source (section 206C) what section 276B is to tax deducted at source. A person who collects tax — typically a seller of specified goods, or a grantor of a lease/licence of specified rights — and fails to pay it to the credit of the Central Government within the prescribed time commits the offence. The collected tax belongs to the exchequer; its retention is the vice. The same architecture of defences applies: 'reasonable cause' under section 278AA (which expressly extends to section 276BB) is a complete defence, and section 278E raises the presumption of culpable mental state.
Safe-harbour proviso
The proviso (inserted by the Finance Act, 2025, with effect from 1 April 2025) is a statutory safe harbour mirroring the TDS proviso: the section does not apply if the tax collected at source has been paid to the credit of the Central Government on or before the time prescribed for filing the statement under the proviso to section 206C(3). Timely deposit before the statement due date therefore takes the case out of the criminal net altogether.
FA 2026 Amendment (w.e.f. 1 March 2026)
By section 26 of the Finance Act, 2026, with effect from 1 March 2026, section 276BB is wholly substituted. The old 'rigorous imprisonment not less than three months but up to seven years and with fine' is replaced by a graded structure: simple imprisonment up to two years, or fine, or both, where the collected tax exceeds Rs. 50 lakh; simple imprisonment up to six months, or fine, or both, where it exceeds Rs. 10 lakh but not Rs. 50 lakh; and fine only in any other case. The safe-harbour proviso (payment before the section 206C(3) statement due date) is retained. The verbatim text in Part B is the pre-substitution text.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
The text reproduced is the pre-Finance Act, 2026 text. With effect from 1 March 2026 section 276BB is wholly substituted (graded thresholds; simple imprisonment) — see the amendment note above.
Failure to pay the tax collected at source.
276BB. If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine:
Provided that the provisions of this section shall not apply if the payment of the tax collected at source has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement under the proviso to sub-section (3) of section 206C in respect of such payment.
C. AUTHORITIES
No decision construes section 276BB on its own merits (candour rule); the provision is a faithful mirror of section 276B and is governed by the TDS prosecution jurisprudence applied mutatis mutandis, together with the substantive section 206C (TCS) authorities.
Cognate authority — TDS prosecution principles applied to TCS
Madhumilan Syntex Ltd. v. Union of India (2007) 290 ITR 199 (SC)
Citation (2007) 290 ITR 199 (SC).
Facts / holding Belated payment of tax already deducted constitutes the completed offence; applied by analogy, late deposit of tax collected at source completes the offence under section 276BB, and the principal-officer route to director liability operates identically.
Sonali Autos (P) Ltd. v. State of Bihar (2017) 396 ITR 636 (Pat)
Citation (2017) 396 ITR 636 (Patna).
Facts / holding Reasonable cause under section 278AA — which expressly extends to section 276BB — is a complete defence; a bona fide oversight in remitting the collected tax will defeat the prosecution.
US Technologies International (P) Ltd. v. CIT (2023) 453 ITR 644 (SC)
Citation (2023) 453 ITR 644 (SC).
Facts / holding Distinguishes a failure to collect/deduct from a failure to deposit what has been collected/deducted; section 276BB, like 276B, bites on the failure to pay over the collected tax.
Facts / holding Where the recipient/buyer has paid the tax, the collector is not again liable to pay the tax itself (though interest may follow) — a Tribunal finding to this effect undermines the foundation of a 276BB charge.
CHAPTER XXII — OFFENCES AND PROSECUTIONS
Section 276BB — Failure to pay the tax collected at source
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. The TCS analogue of section 276B.
Finance Act, 2026: WHOLLY SUBSTITUTED w.e.f. 1 March 2026 — graded-threshold structure; rigorous imprisonment and mandatory minimum removed (see amendment note).
Mechanism: Punishes a collector who fails to pay to the credit of the Central Government the tax collected at source under section 206C within the prescribed time.
Litigation profile: Sparse in its own right; governed by the section 276B (TDS) jurisprudence applied mutatis mutandis.
A. COMMENTARY
Mirror of section 276B
Section 276BB is to tax collected at source (section 206C) what section 276B is to tax deducted at source. A person who collects tax — typically a seller of specified goods, or a grantor of a lease/licence of specified rights — and fails to pay it to the credit of the Central Government within the prescribed time commits the offence. The collected tax belongs to the exchequer; its retention is the vice. The same architecture of defences applies: 'reasonable cause' under section 278AA (which expressly extends to section 276BB) is a complete defence, and section 278E raises the presumption of culpable mental state.
Safe-harbour proviso
The proviso (inserted by the Finance Act, 2025, with effect from 1 April 2025) is a statutory safe harbour mirroring the TDS proviso: the section does not apply if the tax collected at source has been paid to the credit of the Central Government on or before the time prescribed for filing the statement under the proviso to section 206C(3). Timely deposit before the statement due date therefore takes the case out of the criminal net altogether.
FA 2026 Amendment (w.e.f. 1 March 2026)
By section 26 of the Finance Act, 2026, with effect from 1 March 2026, section 276BB is wholly substituted. The old 'rigorous imprisonment not less than three months but up to seven years and with fine' is replaced by a graded structure: simple imprisonment up to two years, or fine, or both, where the collected tax exceeds Rs. 50 lakh; simple imprisonment up to six months, or fine, or both, where it exceeds Rs. 10 lakh but not Rs. 50 lakh; and fine only in any other case. The safe-harbour proviso (payment before the section 206C(3) statement due date) is retained. The verbatim text in Part B is the pre-substitution text.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
The text reproduced is the pre-Finance Act, 2026 text. With effect from 1 March 2026 section 276BB is wholly substituted (graded thresholds; simple imprisonment) — see the amendment note above.
Failure to pay the tax collected at source.
276BB. If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine:
Provided that the provisions of this section shall not apply if the payment of the tax collected at source has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement under the proviso to sub-section (3) of section 206C in respect of such payment.
C. AUTHORITIES
No decision construes section 276BB on its own merits (candour rule); the provision is a faithful mirror of section 276B and is governed by the TDS prosecution jurisprudence applied mutatis mutandis, together with the substantive section 206C (TCS) authorities.
Cognate authority — TDS prosecution principles applied to TCS
Madhumilan Syntex Ltd. v. Union of India (2007) 290 ITR 199 (SC)
Citation (2007) 290 ITR 199 (SC).
Facts / holding Belated payment of tax already deducted constitutes the completed offence; applied by analogy, late deposit of tax collected at source completes the offence under section 276BB, and the principal-officer route to director liability operates identically.
Sonali Autos (P) Ltd. v. State of Bihar (2017) 396 ITR 636 (Pat)
Citation (2017) 396 ITR 636 (Patna).
Facts / holding Reasonable cause under section 278AA — which expressly extends to section 276BB — is a complete defence; a bona fide oversight in remitting the collected tax will defeat the prosecution.
US Technologies International (P) Ltd. v. CIT (2023) 453 ITR 644 (SC)
Citation (2023) 453 ITR 644 (SC).
Facts / holding Distinguishes a failure to collect/deduct from a failure to deposit what has been collected/deducted; section 276BB, like 276B, bites on the failure to pay over the collected tax.
CIT v. Hindustan Coca-Cola Beverages (P) Ltd. (2007) 293 ITR 226 (SC)
Citation (2007) 293 ITR 226 (SC).
Facts / holding Where the recipient/buyer has paid the tax, the collector is not again liable to pay the tax itself (though interest may follow) — a Tribunal finding to this effect undermines the foundation of a 276BB charge.