Section 226 of the Income-tax Act, 1961 provides recovery methods in addition to recovery through a certificate under section 222. It permits recovery from salary, money held by third parties (including banks), money in court custody and, where authorised, movable property. The safeguards and procedural requirements differ by method.
Meaning of section 226 and key definitions
Tax arrears are tax amounts remaining unpaid after becoming legally recoverable. An Assessing Officer (AO) is an income-tax authority exercising assessment and other statutory powers. A Tax Recovery Officer (TRO) is the officer empowered to recover outstanding demands under the Act. A garnishee notice is the common description of a notice directing a third party who owes or holds money for the taxpayer to pay the tax authority instead.
Recovery methods under section 226
Section 226(1) and (1A): recovery with or without a certificate
Where no certificate under section 222 has been drawn up, the AO may use one or more section 226 methods. Where a certificate exists, the TRO may use these methods without prejudice to certificate-based recovery. The availability of multiple statutory methods does not eliminate applicable safeguards.
Section 226(2): deduction from salary
The AO or TRO may require a salary payer to deduct tax arrears from subsequent salary payments and remit the deducted amount as directed. The portion of salary exempt from attachment under section 60 of the Code of Civil Procedure, 1908 remains protected.
Section 226(3): notices to banks and other persons holding money
Under clause (i), an AO or TRO may direct a person who owes or holds money for the assessee to pay the amount required to satisfy arrears, subject to the statutory limits and timing. The notice may cover money becoming due or held later. Clause (ii) permits notices concerning joint accounts and presumes equal shares unless the contrary is proved. Under clause (iii), copies must be sent to the assessee and, where applicable, joint holders.
Clause (iv) generally binds the recipient to comply, including banks, post offices and insurers, without requiring ordinary passbooks or similar documents. Under clause (v), certain claims arising after notice cannot defeat its demand. Under clause (vi), a recipient may make a statement on oath that no money is owed or held; a materially false statement can result in personal liability within statutory limits.
Clause (vii) allows amendment, revocation or extension of the notice. Clause (viii) provides for a receipt and discharge of the third party's liability to the assessee to the extent paid. Clause (ix) addresses personal liability where money is paid to the assessee despite notice. Clause (x) treats noncompliant recipients as assessees in default for the specified amount, allowing further recovery action.
Section 226(4): money in court custody
The AO or TRO may apply to a court holding money belonging to the assessee for payment of the amount needed to discharge the outstanding tax, subject to the court process and the statutory wording.
Section 226(5): distraint and sale of movable property
Where authorised by the specified senior income-tax authority, the AO or TRO may recover arrears by distraint and sale of movable property following the Third Schedule procedures.
What to do after receiving a recovery notice
- Check the demand, assessment year or tax year, taxpayer identity, outstanding amount and issuing authority.
- Verify payments, challans, rectification orders and any appeal or stay orders against the demand.
- If a bank or another third party receives a notice, obtain the notice and examine whether the money legally belongs or is owed to the taxpayer; joint holders should retain supporting ownership records.
- Where legally justified, promptly seek rectification, demand correction, a stay or other available relief from the competent authority; filing an appeal alone does not automatically stop recovery.
- Keep acknowledgments and proof of payments or communications, and obtain professional advice where attachment or competing ownership claims are involved.
Illustration
Suppose a legally recoverable demand of Rs. 80,000 remains outstanding and a bank holds Rs. 50,000 belonging to the taxpayer. Subject to the terms of a valid notice and any competing legal rights, section 226(3) can require the bank to pay an amount up to the relevant recoverable sum. If a joint account is involved, the statutory presumption of equal shares is rebuttable by evidence.
Related legal provisions
Section 222 governs certificate-based recovery; section 220 concerns payment of demands and default; and section 225 deals with stays and certificate adjustments. The Second and Third Schedules prescribe procedural rules for specified recovery methods.
Official references
Consult the Income Tax Department, Income Tax e-Filing Portal and India Code for legislation, procedural materials and updates. The precise text applicable to a case depends on its relevant tax year and subsequent amendments.
Section 226: statutory extract and amendment history
The following source text and amendment notes are retained from the original page for reference. Numbered annotations are historical footnote markers; confirm the applicable consolidated legislation before relying on the extract.
Read the original section text and amendment notes
1 (1) Where no certificate has been drawn up under section 222, the Assessing Officer may recover the tax by any one or more of the modes provided in this section. (1A) Where a certificate has been drawn up under section 222, the Tax Recovery Officer may, without prejudice to the modes of recovery specified in that section, recover the tax by any one or more of the modes provided in this section.
(2) If any assessee is in receipt of any income chargeable under the head Salaries, the 2 Assessing Officer 3 or Tax Recovery Officer may require any person paying the same to deduct from any payment subsequent to the date of such requisition any arrears of tax due from such assessee, and such person shall comply with any such requisition and shall pay the sum so deducted to the credit of the Central Government or as the Board directs:
Provided that any part of the salary exempt from attachment in execution of a decree of a civil court under section 60 of the Code of Civil Procedure, 1908 (5 of 1908), shall be exempt from any requisition made under this sub-section.
(3) (i) The 2 Assessing Officer 3 or Tax Recovery Officer may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay to the 2 Assessing Officer 3 or Tax Recovery Officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount.
(ii) A notice under this sub-section may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and for the purposes of this sub-section, the shares of the joint holders in such account shall be presumed, until the contrary is proved, to be equal.
(iii) A copy of the notice shall be forwarded to the assessee at his last address known to the 2 Assessing Officer 3 or Tax Recovery Officer, and in the case of a joint account to all the joint holders at their last addresses known to the 2 Assessing Officer 3 or Tax Recovery Officer.
(iv) Save as otherwise provided in this sub-section, every person to whom a notice is issued under this sub-section shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary.
(v) Any claim respecting any property in relation to which a notice under this sub-section has been issued arising after the date of the notice shall be void as against any demand contained in the notice.
(vi) Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the 2 Assessing Officer 3 or Tax Recovery Officer to the extent of his own liability to the assessee on the date of the notice, or to the extent of the assessees liability for any sum due under this Act, whichever is less.
(vii) The 4 Assessing Officer 5 or Tax Recovery Officer may, at any time or from time to time, amend or revoke any notice issued under this sub-section or extend the time for making any payment in pursuance of such notice.
(viii) The 4 Assessing Officer 5 or Tax Recovery Officer shall grant a receipt for any amount paid in compliance with a notice issued under this sub-section, and the person so paying shall be fully discharged from his liability to the assessee to the extent of the amount so paid.
(ix) Any person discharging any liability to the assessee after receipt of a notice under this sub-section shall be personally liable to the 4 Assessing Officer 5 or Tax Recovery Officer to the extent of his own liability to the assessee so discharged or to the extent of the assessees liability for any sum due under this Act, whichever is less.
(x) If the person to whom a notice under this sub-section is sent fails to make payment in pursuance thereof to the 4 Assessing Officer5 or Tax Recovery Officer, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him, in the manner provided in sections 222 to 225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under section 222.
(4) The 4 Assessing Officer 5 or Tax Recovery Officer may apply to the court in whose custody there is money belonging to the assessee for payment to him of the entire amount of such money, or, if it is more than the tax due, an amount sufficient to discharge the tax.
6 (5) The 4 Assessing Officer 5 or Tax Recovery Officer may, if so authorised
by the 7 8 Principal Chief Commissioner or Chief Commissioner or 9 Principal
Commissioner or Commissioner by general or special order, recover any arrears of
tax due from an assessee by distraint and sale of his movable property in the
manner laid down in the Third Schedule.
Historical amendment notes
1. Subs. by Act 4 of 1988, s. 88, for sub-section (1) (w.e.f. 1-4-1989).
2. Subs. by Act 3 of 1989, s. 36, for Income-tax Officer (w.e.f. 1-4-1988).
3. Ins. by s. 37, ibid (w.e.f. 1-4-1989).
4. Subs. by Act 3 of 1989, s. 36, for Income-tax Officer (w.e.f. 1-4-1988).
5. Ins. by s. 37, ibid. (w.e.f. 1-4-1989).
6. Subs. by Act 10 of 1965, s. 54, for sub-section (5) (w.e.f. 1-4-1965).
7. Subs. by Act 4 of 1988, s. 2, for Commissioner (w.e.f. 1-4-1988).
8. Subs. by Act 25 of 2014, s. 4, for Chief Commissioner (w.e.f. 1-6-2013).
9. Subs. by s. 4, ibid., for Commissioner (w.e.f. 1-6-2013).
Frequently asked questions
Can the Income Tax Department recover tax directly from a bank account?
Section 226(3) of the 1961 Act permits a written notice to a bank or other person holding money for an assessee, subject to statutory conditions and rights.
Can all salary be taken for tax recovery?
No. Section 226(2) preserves the portion of salary exempt from attachment under section 60 of the Code of Civil Procedure, 1908.
Does filing an appeal automatically stop recovery?
No. A taxpayer should seek an appropriate stay or other relief where available.
Can a joint bank account be covered by a recovery notice?
Section 226(3)(ii) addresses joint accounts and presumes equal shares until evidence establishes otherwise.