Section 413 · Collection & recovery
Section 413 of the Income-tax Act, 2025 — Certificate by Tax Recovery Officer and Validity Thereof
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XIX
📜 What the law says — Section 413, Income-tax Act 2025
413. (1) When an assessee is in default or is deemed to be in default in making a
payment of tax, the Tax Recovery Officer may draw up under his signature
a statement in such form as may be prescribed specifying the amount of arrears
due from the assessee (such statement being herein and in sections 414 to 416
referred to as certificate) and shall proceed to recover from such assessee the amount
specified in the certificate by one or more of the modes mentioned below, as per
the rules prescribed in this regard,—
(a) attachment and sale of movable property of the assessee;
(b) attachment and sale of immovable property of the assessee;
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[(c) appointing a receiver for the management of movable and immovable
properties of the assessee.]
(2) The Tax Recovery Officer may take action under sub-section (1), whether or not
proceedings for recovery of the arrears by any other mode have been taken.
(3) The assessee shall not be entitled to dispute the correctness of any certificate
drawn up by the Tax Recovery Officer on any ground.
(4) The Tax Recovery Officer may cancel the certificate if, for any reason, he
considers it necessary so to do, or may correct any clerical or arithmetical mistake
therein.
(5) For the purposes of this section, the movable or immovable property of the
assessee shall include any property—
(a) which has been transferred, directly or indirectly on or after the 1st June,
1973, by the assessee to his spouse or minor child or son’s wife or son’s
minor child, otherwise than for adequate consideration, and which is
held by, or stands in the name of, any of the said persons; and
(b) so far as the movable or immovable property so transferred to his minor
child or his son’s minor child is concerned, it shall, even after the date
of attainment of majority by such minor child or son’s minor child, as
the case may be, continue to be included in the movable or immovable
property of the assessee for recovering any arrears due from the assessee
in respect of any period prior to such date.
Tax Recovery Officer by whom recovery is to be effected.
In plain language
What Section 413 actually deals with
Section 413 of the Income-tax Act, 2025 is the starting gun for tax recovery. Once a taxpayer becomes an "assessee in default" (or is deemed to be in default) for not paying a tax demand, this section empowers the Tax Recovery Officer (TRO) to draw up, under his own signature, a formal statement called a certificate specifying the exact amount of arrears due. That certificate is the legal foundation on which the government can seize and sell your assets. It corresponds to Sections 222 and 224 of the old Income-tax Act, 1961.
The most important structural change from the 1961 law is a shift from a passive to an active model. Earlier, the Income-tax Officer used to "forward" a certificate to the TRO. Under Section 413, the TRO himself draws up the certificate, consolidating the recovery power in one authority and cutting a bureaucratic step.
The four modes of recovery
Once the certificate is drawn up, the TRO may recover the arrears by one or more of these modes, in line with the rules in the Second Schedule to the Act:
- Attachment and sale of movable property — bank balances, vehicles, jewellery, shares, machinery.
- Attachment and sale of immovable property — land, house, commercial premises.
- Arrest and detention in prison — used sparingly, as a last resort against wilful defaulters.
- Appointing a receiver — a person appointed to manage the defaulter's movable and immovable property and pay dues from the income.
Who it applies to
- Any assessee in default or deemed to be in default — individuals, HUFs, firms, companies, LLPs.
- It applies only after a demand is unpaid beyond the notice period (normally 30 days under the demand notice, unless reduced), and after the assessee is treated as being in default.
- It reaches certain transferred property too (see sub-section (5) below).
Key conditions and safeguards
- Concurrent recovery [sub-section (2)]: The TRO may act under this section whether or not recovery has already been attempted by any other mode (for example, garnishing a bank account directly). Multiple channels can run at the same time.
- You cannot dispute the certificate's correctness [sub-section (3)]: The assessee is not entitled to dispute the correctness of the certificate before the TRO "on any ground." Your remedy against the demand itself is through appeal or rectification under the assessment provisions — not by fighting the recovery certificate.
- Cancellation and correction [sub-section (4)]: The TRO may cancel the certificate if he considers it necessary, and may correct any clerical or arithmetical mistake in it. This is the TRO's own housekeeping power, not a right of the taxpayer.
- Transferred property caught [sub-section (5)]: Property transferred by the assessee without adequate consideration to a spouse, minor child, or son's wife (historically on or after 1 June 1973) can still be attached for recovery — closing the escape route of gifting assets away. This continues even after a minor becomes a major, for arrears relating to the minority period.
How it interacts with related sections
- Section 414 decides which TRO has jurisdiction to recover.
- Section 415 deals with stay of proceedings and amendment/cancellation of the certificate.
- The Second Schedule lays down the detailed attachment-and-sale procedure, including the notice to the defaulter (typically 15 days to pay before enforcement) and the certificate form (equivalent to the old Form ITCP-1 / Form 153).
Practical implications for taxpayers
If you receive a recovery certificate or TRO notice, do not try to argue that the amount is wrong before the TRO — that door is shut by sub-section (3). Instead, act fast on the real remedies: file or pursue your appeal, seek a stay of demand (commonly by depositing around 20% of the disputed demand), apply for rectification of any genuine mistake in the assessment, or request an instalment arrangement. Ignoring a certificate can lead directly to attachment of your bank account or property.
💡 Example
Worked example 1 — a company with unpaid arrears. ABC Pvt Ltd is assessed with a tax demand of ₹40,00,000. The demand notice gives 30 days to pay; the company pays nothing and files no stay application. It is now an "assessee in default." The Tax Recovery Officer draws up a certificate under Section 413(1) for ₹40,00,000 plus interest. Because sub-section (2) allows concurrent recovery, the TRO simultaneously attaches the company's bank account (recovering ₹15,00,000) and issues a notice to attach and sell a factory shed for the balance ₹25,00,000. The company cannot contest the ₹40,00,000 figure before the TRO — it must instead pursue its appeal and seek a stay.
Worked example 2 — transferred property (sub-section 5). Mr Sharma owes ₹12,00,000 in arrears. A year earlier, to shield his assets, he "gifted" a plot worth ₹30,00,000 to his wife for no real consideration. Under Section 413(5), the TRO can still treat that plot as reachable and attach it for the ₹12,00,000 recovery, because the transfer was without adequate consideration to his spouse.
A short story. Rina, a small business owner, tossed aside a tax demand assuming "they'll send reminders." Three months later her bank called: her current account was frozen under a TRO attachment. She rushed to a CA, who explained that the recovery certificate under Section 413 could not be argued away — but by promptly filing an appeal and depositing 20% of the disputed amount, she obtained a stay and the account was released. The lesson: fight the demand through appeal and stay, never by ignoring the certificate.
| Sub-section | What it covers | Practical effect |
|---|
| 413(1) | TRO draws up certificate specifying arrears; four modes of recovery | Legal basis to attach/sell property, arrest, or appoint a receiver |
| 413(2) | Concurrent recovery permitted | Bank attachment and property sale can run at the same time |
| 413(3) | Correctness of certificate cannot be disputed before TRO | Challenge the demand via appeal/rectification, not the certificate |
| 413(4) | TRO may cancel or correct clerical/arithmetical mistakes | Housekeeping power of the officer, not a taxpayer right |
| 413(5) | Property transferred without adequate consideration to spouse/minor child/son's wife | Gifted-away assets can still be attached for recovery |
Related sections
Section 414 — Tax Recovery Officer by whom recovery is to be effected Section 415 — Stay of proceedings and amendment or cancellation of certificate Section 411 — When an assessee is deemed to be in default Section 398 — Notice of demand Second Schedule — Procedure for recovery of tax (attachment and sale) Section 416 — Other modes of recovery
Forms under this section
Income-tax forms (2025) prescribed under Section 413:
Frequently asked questions
What is a certificate under Section 413?
It is a signed statement drawn up by the Tax Recovery Officer stating the exact amount of tax arrears due from an assessee in default. It is the legal document that authorises recovery by attachment, sale, arrest, or appointment of a receiver.
Can I dispute the amount in the recovery certificate before the TRO?
No. Sub-section (3) specifically bars you from disputing the correctness of the certificate on any ground before the Tax Recovery Officer. You must challenge the underlying demand through appeal, stay, or rectification instead.
What are the modes of recovery available to the TRO?
Four modes: attachment and sale of movable property, attachment and sale of immovable property, arrest and detention in prison, and appointment of a receiver to manage your property. The TRO can use one or more of them, even simultaneously.
Can the TRO recover from property I gifted to my spouse?
Yes. Under sub-section (5), property transferred without adequate consideration to your spouse, minor child, or son's wife can still be attached for recovery, so gifting assets away does not protect them.
Which section of the old 1961 Act does Section 413 correspond to?
It corresponds broadly to Sections 222 and 224 of the Income-tax Act, 1961. The key change is that the Tax Recovery Officer now draws up the certificate directly instead of the Income-tax Officer forwarding it.
How do I stop recovery once a certificate is issued?
File or pursue your appeal and apply for a stay of demand (commonly by depositing around 20% of the disputed amount), seek rectification of any genuine mistake, or request an instalment arrangement. Ignoring the certificate can lead to your bank account or property being attached.
Can the TRO correct a mistake in the certificate?
Yes. Sub-section (4) allows the TRO to cancel the certificate if he considers it necessary, or to correct any clerical or arithmetical mistake in it. This is the officer's own power, not a right you can demand.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 05 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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