A representative assessee who pays tax on behalf of another can claim that amount back from the principal or keep an equivalent sum from any funds they hold in that capacity.
If they anticipate being assessed, they may also retain an amount equal to their estimated liability from any payment due to the principal.
When there is a dispute over the retained amount, the representative can obtain a certificate from the Assessing Officer, which serves as a warrant to retain the specified sum until the liability is finally settled.
At settlement, the recoverable amount cannot exceed the certified amount, unless the representative has additional assets of the principal.
📜 Official text of the section +
305. (1) Every representative assessee who, as such, pays any sum under this Act,
shall be entitled to recover the sum so paid from the person on whose behalf
it is paid, or to retain out of any moneys that may be in his possession or may come
to him in his representative capacity, an amount equal to the sum so paid.
(2) Any representative assessee, or any person who apprehends that he may be
assessed as a representative assessee, may retain out of any money payable by him
to the person on whose behalf he is liable to pay tax (hereinafter in this section 306
referred to as the principal), a sum equal to his estimated liability under this Chapter.
(3) In the event of any disagreement between such principal and such represen -
tative assessee or person with regard to the amount to be so retained as referred
to in sub-section (2), such representative assessee or person may secure from the
Assessing Officer a certificate stating the amount to be so retained pending final
settlement of the liability, and the certificate so obtained shall be his warrant for
retaining that amount.
(4) The amount recoverable from such representative assessee or person at the time
of final settlement shall not exceed the amount specified in such certificate, except
to the extent to which such representative assessee or person may at such time have
in his hands additional assets of the principal.
3. —Representative assessees—Special cases
Who may be regarded as agent.
Plain-language summary — not the official text. Refer to the bare Act and confirm with a professional for your specific case.