Section 477
Section 477: failure to pay tax collected at source to the government
Section 477 is the Tax Collected at Source (TCS) counterpart to Section 476's TDS offence - it criminalises collecting tax at source and then failing to deposit it with the Central Government.
What the section says
If a person fails to pay the tax collected by them to the credit of the Central Government, as required under Section 397(3)(a), they are punishable under the current text (substituted by the Finance Act, 2026, effective 1 April 2026):
| Amount of tax involved | Punishment |
|---|---|
| Exceeds ₹50,00,000 | Simple imprisonment up to two years, or fine, or both |
| Exceeds ₹10,00,000 but does not exceed ₹50,00,000 | Simple imprisonment up to six months, or fine, or both |
| Any other case | Fine only |
An important carve-out
The section does not apply if the collected tax was paid to the credit of the Central Government on or before the time prescribed for filing the TCS statement under Section 397(3)(b) for that payment.
Before the Finance Act, 2026 amendment, the punishment was rigorous imprisonment for a term of not less than three months, extendable to seven years, with fine, uniformly regardless of amount - the current tiered structure is a significant change.
Frequently asked questions
Is failing to deposit collected TCS a criminal offence?
Yes - Section 477 makes it an offence to collect tax at source and fail to pay it to the credit of the Central Government, with punishment tiered by the amount involved.
Can I avoid this offence if I deposit the tax late but before the statement deadline?
Yes - the section does not apply if the collected tax was actually paid to the government on or before the time prescribed for filing the relevant TCS statement under Section 397(3)(b).
How is this different from Section 476?
Section 476 covers tax deducted at source (TDS) and certain other specified payments; Section 477 is the parallel offence for tax collected at source (TCS) under Section 397(3)(a).
Related sections
Want this applied to your actual filing, not just explained?
Get help with TCS compliance to avoid this offenceLast updated 9 September 2026