Section 191 of the Income-tax Act, 1961: Direct Payment of Income Tax
Section 191 explains when an assessee must pay income tax directly, including cases where tax was not deducted at source. It also addresses consequences for a person responsible for deducting tax. For the tax year beginning 1 April 2026, the corresponding rule appears in Section 391 of the Income-tax Act, 2025.
1. Meaning and purpose of Section 191
Under the 1961 Act, tax is generally collected through tax deducted at source (TDS), tax collected at source (TCS), advance tax or self-assessment tax, as applicable. Section 191 ensures that the underlying tax obligation does not disappear merely because no tax was deducted from a payment.
In substance, the section provides that where the relevant chapter contains no requirement to deduct tax at the time of payment, or where required tax has not been deducted, the income tax is payable directly by the assessee. The tax charge itself is governed by the charging and computation provisions of the Act.
2. Explanation of the statutory provisions
Section 191(1): Direct payment by the assessee
The recipient of income remains responsible for paying tax on taxable income where tax is not deducted, subject to the relevant computation, credit and payment provisions. Non-deduction of TDS does not automatically make the income tax-free.
Section 191(2): Eligible start-up ESOPs
A later amendment added a special rule for income from specified securities or sweat equity shares allotted or transferred by an eligible start-up employer. For qualifying cases, the tax on the relevant perquisite is payable within fourteen days after the earliest of: (i) expiry of forty-eight months from the end of the relevant assessment year, (ii) sale of the specified security or sweat equity share, or (iii) cessation of employment with the employer. Eligibility and the precise tax period must be checked against the applicable statutory text.
This special provision is important because older reproductions of Section 191, including the earlier version of this webpage, omit it. It should not be assumed to apply to ordinary employee share plans or non-qualifying employers.
Explanation to Section 191: Default by the deductor
Where a person obliged to deduct tax, including an employer covered by the specified salary-tax provisions, fails to deduct or pay the tax and the assessee has also not paid the tax directly, the deductor may be treated as an assessee in default under Section 201(1), without prejudice to other statutory consequences.
The rules for deductor liability, interest, relief where the payee has paid tax, and procedural conditions must be examined under Section 201 and the relevant rules; Section 191 alone does not settle every aspect of recovery.
3. Income-tax Act, 1961 and Income-tax Act, 2025
| Subject | 1961 Act | 2025 Act |
|---|---|---|
| Direct payment of tax | Section 191 | Section 391 |
| General obligation | Tax paid directly where no deduction provision exists or tax was not deducted | Section 391(1) states the same core circumstances in clauses (a) and (b) |
| Eligible start-up employee share benefit | Section 191(2), read with Section 17(2)(vi) and Section 80-IAC | Section 391(2), read with Section 17(1)(d), Section 140 and Section 289(3) |
| Default by deductor | Explanation to Section 191; Section 201(1) | Section 391(3); Section 398(1) |
The 2025 Act took effect on 1 April 2026. The correct legislation depends on the relevant tax year and applicable transition and savings provisions. Do not substitute new section numbers into documents concerning earlier periods without checking the governing law.
4. Practical examples
Example A: Taxable income without TDS
A person receives taxable income from which no tax is required to be deducted at source. If tax is payable after computing total income and available credits, the person must discharge the liability directly through the applicable tax-payment mechanism.
Example B: Deductor fails to deduct tax
A payer is legally required to deduct TDS but fails to do so. The recipient must still account for the taxable income and pay the tax due. The payer's separate exposure to default proceedings depends on the applicable provisions, including statutory reliefs and conditions.
Example C: Eligible start-up ESOP benefit
An employee receives qualifying specified securities from an eligible start-up. The special statutory payment timeline may apply to the tax on that perquisite, but only after verifying employer eligibility, the nature of the securities and the relevant triggering date.
5. Compliance checklist
- Identify the applicable tax year and governing Income-tax Act.
- Include all taxable income in the relevant return, even where TDS was not deducted.
- Check Form 26AS, AIS and the available tax-credit records before computing the balance payable.
- Determine whether advance tax, self-assessment tax, interest or any special payment timing applies.
- For a deductor default, examine the applicable statutory relief and documentary requirements instead of assuming that the recipient's payment automatically resolves every consequence.
- Retain challans, returns, TDS certificates and relevant correspondence.
6. Frequently asked questions
Does income become exempt if the payer did not deduct TDS?
No. Taxability is determined under the applicable charging and computation provisions. Section 191 addresses direct payment when tax is not deducted.
Can the payer still be liable after the recipient pays tax?
The answer depends on the relevant default and relief provisions, including Section 201 under the 1961 Act or Section 398 under the 2025 Act, and satisfaction of prescribed conditions. Interest or other consequences may require separate consideration.
What is the equivalent of Section 191 in the Income-tax Act, 2025?
Section 391 governs direct payment under the 2025 Act. Section 191 of the 2025 Act concerns a different subject: tax on the accumulated balance of a recognised provident fund.
Is direct tax payment the same as advance tax?
Not necessarily. Direct payment describes who pays the tax; advance tax is a specific mechanism and timing requirement. Self-assessment tax may also be payable, depending on the circumstances.
7. Official legislation and filing resources
- Income Tax Department: Section 191 of the Income-tax Act, 1961
- Income Tax Department: Income-tax Act, 1961, as amended by Finance Act, 2025 (PDF)
- Income Tax Department: Income-tax Act, 2025 (PDF), including Section 391
- Income Tax Department: Section 398 of the 2025 Act (deductor default)
- Income Tax e-Filing Portal: return filing and tax-payment services
This article provides general legal information. Statutory amendments, notifications, transitional provisions and facts of individual cases should be checked before taking action.