Section 40(a)(ia) under the
Income-tax Act, 2025
30% disallowance for failure to deduct/pay TDS on payments to residents
Topic
30% disallowance for failure to deduct/pay TDS on payments to residents — Business provisions under the Income-tax Act, 2025 (Act 30 of 2025).
What carried over
The substance of this provision was not changed by the re-write. What moved is the citation.
Substance preserved: 30% of the sum disallowed where TDS under Chapter XIX-B was not deducted, or deducted but not paid by the s.263(1) return due date; allowed back in the year of payment (s.35(b)(i)(A)); and the payee-has-filed relief (old second proviso to 40(a)(ia), keyed to old s.201) survives at s.35(b)(i)(B) cross-referring to s.398(2). The non-resident counterpart, old 40(a)(i), is s.35(b)(ii) and remains a 100% disallowance. Old 40A is s.36.
Source
Verified against bare text of s.35(b)(i) in ICAI publication. ICAI concordance row '35 | Amounts not deductible in certain circumstances | 40'.
CBDT publishes its own correspondence utility on incometaxindia.gov.in and that is the authority. Spot-check anything high-stakes there before you rely on it.
This is a navigational aid for the 1961 → 2025 transition, not tax advice. It helps you find the right place in the new Act when you already know the old section. Confirm every citation against the bare Act and against CBDT's own correspondence utility before relying on it in a return, certificate, notice reply or opinion. The source text used here is the Act as passed, so any rate or threshold amended by the Finance Act, 2026 is not reflected; section numbers are unaffected.