Section 190 of the Income Tax Act — The Backbone of Advance Tax & TDS Collection

Many sections of the Income-tax Act are debated in courts, quoted in newspaper columns, and frequently cited in business boardrooms. And then there are sections like Section 190 — rarely spoken about, yet foundational to how the entire tax administration functions. Section 190 is simple in wording but complex in its implications. It anchors the Government’s ability to collect tax upfront, even before the final tax liability is computed. In other words, it makes sure tax revenue does not depend solely on year-end filings & assessments.

In an economy like India, with millions of income earners and significant informal-to-formal transition happening simultaneously, this mechanism ensures liquidity for the State and discipline for taxpayers.

The Essence of Section 190

At its core, Section 190 establishes two things:

• Tax can be collected before completion of assessment, and
• Such collection may happen via deduction at source & advance payment

The wording makes an important point: the obligation to deduct or pay advance tax exists whether or not the income has been fully quantified under the mode of computation of total income.

Put simply, tax does not wait for paperwork — it flows with income.

This concept applies across:

This prevents "year-end tax shock" for both government & taxpayers.

Also Read: Interest on Default in Advance Tax Instalments

Why Section 190 Was Needed

Before modern TDS and advance-tax systems matured, government revenue was vulnerable. If taxpayers delayed filing or payment, the State’s revenue pipeline stalled. Public finance depends on predictable inflows. Salaries must be paid, infrastructure funded, welfare provided — and the government cannot wait until July or September every year to collect funds.

Section 190 ensured:

• Continuous cash flow to the Government
• Systemic discipline
• Prevention of tax leakage
• Smoother financial management for taxpayers
• Synchronisation between income generation & tax liability

It introduced the philosophy that tax follows income immediately, not in hindsight.

Legal Significance: A Self-Contained Obligation

One of the strongest features of Section 190 is that it operates independently of Section 4 (charging section). That means, Even before final computation, the State has the right to secure revenue.

Case law through decades has affirmed this principle — tax withholding & advance payment are not provisional favours; they are enforceable duties.

How Section 190 Interacts With the Broader Tax Framework

To appreciate Section 190, one must see it as part of a chain:

Section 190 creates the interface between earning & paying.

Also Read: Penalty for Under-Reporting and Misreporting of Income

Practical Illustration

Imagine a consultant earning ₹1,50,000 from a corporate client.
The company must deduct TDS before paying the consultant. The consultant, if earning significantly across clients, will also pay advance tax every quarter."

Whether final allowable deductions are known or not — whether depreciation computation under business income is finalised or not — tax must still move first.

Only at year-end do aggregation, set-off, final deductions, and reliefs adjust the net payable or refundable.

Key Principles Embedded in Section 190

1. Tax Preceding Final Liability

Tax flows during the year, not after.

2. Pay-As-You-Earn Model

Income is taxed at the point it crystallises.

3. Payer's Responsibility

Tax is deducted at source by the payer at the prescribed rate — non-compliance turns lawful income into a default-laden risk zone.

4. Protection for Government Revenues

Tax system does not depend on taxpayer declaration alone.

Connection with Modern Digital Tax Infrastructure

Today, this philosophy powers systems such as:

• AIS & TIS reporting
• 26AS credit alignment
• TDS-TCS real-time tracking
• Pre-filled return systems
• Annual information returns
• PAN-linked transaction reporting

What Section 190 envisioned in a paper-ledger era, technology now executes in seconds.

Also Read: TDS on Benefits and Perquisites

Why This Section Matters for Businesses & Individuals

For taxpayers, understanding Section 190 is strategic. It helps optimise:

• Quarterly advance-tax planning
• Timing of expense claims
• Salary structuring"
• TDS reconciliation
• Cash-flow forecasting
• Avoidance of interest under 234B/234C

A disciplined taxpayer understands that TDS & advance tax are not administrative irritants — they are statutory imperatives shaped by decades of revenue administration evolution.

A Section Designed for Stability

Section 190 embodies a governance philosophy: predictability over uncertainty.

Without this rule:

• Tax inflow would fluctuate
• Government borrowing needs would rise
• Defaults would surge
• Budget execution would suffer

It ensures tax flows mirror economic activity — steady, not sporadic.

Conclusion

Section 190 may rarely be discussed in headlines or courtrooms, but its impact is monumental. It cements India's deduction at source & advance payment framework and ensures tax on income must be paid through deduction or collection at source, regardless of assessment completion. It quietly guarantees continuous tax inflow, imposes discipline, and aligns the tax system with modern economic realities where real-time compliance is the norm.

If you're structuring salaries, planning advance tax payments, reviewing TDS defaults, or facing reconciliation issues in AIS/26AS, our CA team at CallMyCA.com can help ensure compliance, optimise planning, and avoid penalties and notices.