Section 276BB: Failure to Pay Tax Collected at Source
Section 276BB of the Income-tax Act, 1961 deals with failure to remit tax collected at source (TCS) to the Central Government. The Finance Act, 2026 substituted the section with effect from 1 March 2026, introducing graduated punishment and preserving an important statutory exception for payment by the TCS statement deadline.
What is Section 276BB?
Section 276BB is a prosecution provision in Chapter XXII (Offences and Prosecutions). It addresses a person who has collected tax under Section 206C but fails to pay that collected tax to the credit of the Central Government. It is distinct from Section 276B, which concerns specified failures involving tax deducted at source (TDS).
Section 206C sets out tax collection at source obligations for specified transactions, persons and circumstances, together with remittance and statement requirements. The applicable transaction, collection date, remittance due date and statement deadline must be checked under the law and rules applicable to the period in question.
Punishment under Section 276BB from 1 March 2026
Section 26 of the Finance Act, 2026 substituted Section 276BB with effect from 1 March 2026. The amended statutory framework is:
| Amount of TCS involved | Statutory punishment |
|---|---|
| Exceeds Rs. 50 lakh | Simple imprisonment for a term up to two years, or fine, or both |
| Exceeds Rs. 10 lakh but does not exceed Rs. 50 lakh | Simple imprisonment for a term up to six months, or fine, or both |
| Rs. 10 lakh or below | Fine |
The substituted provision no longer prescribes the former minimum three months' rigorous imprisonment and maximum seven years' rigorous imprisonment. The amended section should not be confused with the pre-substitution wording still reproduced on older websites.
When does the prosecution provision not apply?
The proviso expressly excludes application of Section 276BB if the tax collected at source is paid to the Central Government on or before the time prescribed for filing the relevant TCS statement under the proviso to Section 206C(3). This exception was inserted by the Finance Act, 2025 and retained in the 2026 substituted section.
The proviso refers to the prescribed statement-filing deadline, not simply the ordinary deposit deadline. Whether it protects a particular person depends on the dates, applicable rules and evidence of payment. A delay can still attract other statutory consequences, including applicable interest or fees, even where this prosecution provision does not apply.
Matters to examine in a Section 276BB case
- Whether the person was legally required to collect TCS under the applicable version of Section 206C.
- Whether the relevant amount was actually collected from the buyer or other payer.
- Whether, when and how much of the collected amount was credited to the Central Government.
- Whether the statutory exception for payment by the TCS statement deadline is satisfied.
- Which statutory text applies to the alleged default and how any later amendment or saving provision affects the proceedings.
- Whether the statutory requirements governing sanction and prosecution, including Section 279 where applicable, have been followed.
Illustrative examples
Example 1: A collector deposits the TCS after the ordinary deposit date but before the legally prescribed deadline for filing the corresponding TCS statement. Subject to the relevant facts and dates, the proviso to Section 276BB may exclude prosecution under this section; separate interest or compliance consequences require independent examination.
Example 2: A collector fails to deposit Rs. 18 lakh of TCS and the proviso does not apply. Under the substituted section, the amount falls in the band exceeding Rs. 10 lakh but not exceeding Rs. 50 lakh; the prescribed punishment is simple imprisonment up to six months, fine, or both. This is an illustration of the statutory band, not a conclusion that prosecution or conviction is automatic.
Legislative history and transition
Section 276BB was inserted by the Finance Act, 1988 with effect from 1 June 1988. The earlier provision generally prescribed rigorous imprisonment of at least three months and up to seven years, together with fine. The Finance Act, 2025 inserted the payment-by-statement-deadline proviso. Section 26 of the Finance Act, 2026 then substituted the punishment structure with effect from 1 March 2026.
With the commencement of the Income-tax Act, 2025 on 1 April 2026, the 1961 Act was repealed subject to savings and transitional provisions. Section 477 of the 2025 Act addresses failure to pay tax collected at source under the new legislative framework. For historical periods, verify the operative provision and the relevant savings rules before applying either Act.
Official statutory references
- Income Tax Department: Section 276BB, amended text
- Income Tax Department: Finance Act, 2026, Section 26
- Finance Act, 2025: Section 89 and the Section 276BB proviso
- Income Tax Department: TCS overview and compliance
- Income Tax Department: Penalties and prosecutions
Frequently asked questions
Is imprisonment mandatory under the amended Section 276BB?
No. For amounts above Rs. 10 lakh, the substituted text allows simple imprisonment, fine, or both. For amounts up to Rs. 10 lakh, it provides for fine.
Does paying TCS after its ordinary deposit due date always trigger Section 276BB?
No. The proviso excludes the section where the TCS is credited by the prescribed deadline for filing the relevant TCS statement. Other statutory consequences of delayed payment may remain.
What is the corresponding provision under the Income-tax Act, 2025?
Section 477 deals with failure to pay tax collected at source under the 2025 Act. Transitional and savings provisions should be checked for earlier periods.
This article is general legal information, not advice on the facts of a particular prosecution or assessment. Consult the statutory text and applicable rules for the relevant period.