Step-by-Step Filing Process of Form No. 149 (Earlier 26A)

All about Chartered Accountant Certificate u/s 201(1)/Rule 31ACB – Form No. 149 (Earlier 26A)

• Section 201(1) of the Income Tax Act provides that a deductor who fails to deduct or deposit Tax Deducted at Source is treated as an “assessee in default.” However, relief is provided where the payee (deductee) has already paid tax on such income. This relief mechanism is operationalized via Rule 31ACB through Form No. 149 (earlier Form 26A).

• Form No. 149 (earlier known as Form 26A) is a chartered accountant’s certificate prescribed u/s 201(1) / Rule 31ACB of the Income Tax Act. Form No. 149 protects deductors from being classified as defaulters in genuine cases where the recipient has already paid tax. It acts as a crucial compliance tool for deductors. However, it does not waive interest liability.

Purpose of Form No. 149 :

Form 149 is used to certify that the deductee has already reported the income. Confirm that tax on such income has been paid and provide relief to the deductor from being treated as an assessee in default; however, in short, we can say that there is no double tax recovery, once from the deductor and again from the deductee. In another way, we can say that we avoid “assessee-in-default” status for Tax Deducted at Source non-deduction. It is to be note that income tax Form No. 149 Applicable to both resident and non-resident deductees

• As per the proviso to Section 201(1), the deductor will not be treated as an assessee-in-default if the deductee has filed a return u/s 139, considered such income in the return, and paid tax on such income. Along with a chartered accountant, it furnishes a certificate in Form 149.
• A recent change was made by the income tax department: Form 26A was renamed as Form 149 and is a fully electronic process via the portal/TRACES. Form 149 is required and applicable where Tax Deducted at Source was not deducted or was short-deducted and income was taxable in the hands of the payee.
• The payee has filed their ITR, included such income, and paid due taxes. A basic key benefit of Chartered Accountant certification by income tax form No. 149 is support in avoiding double tax recovery. Reduces litigation exposure, helps in Tax Deducted at Source scrutiny cases and enhances compliance credibility

Mandatory by a chartered accountant’s certificate:

It is mandatory to be certified by a practicing chartered accountant. Chartered Accountant Certifies (Annexure A) : A chartered accountant validates the deductee has filed a return of income, income on which tax deducted at source was not deducted is included, and taxes have been paid on such income. and matching with records (ITR, Form 26AS, AIS, etc.)

• Timely Tax Deducted at Source compliance remains critical to avoid interest charges. It is furnished electronically by a deductor who has failed to deduct or short-deduct Tax Deducted at Source. This income tax form certifies that the taxpayer deductee has already included the relevant income in their income tax return & has paid the due taxes.
• Upon submission of Income Tax Form 149, the deductor is relieved from being treated as an “assessee in default” for the Tax Deducted at Source lapse, although interest liability u/s 201(1A) may still apply. Following quick technical takeaways of Form No. 149 (earlier known as Form 26A):
• Interest Implication: Even after Form 149, interest applies from the date Tax Deducted at Source was deductible till the date of filing the return by the deductee, and the rate of interest will be 1% per month or part thereof. From 149 filling conditions, the payee must have filed an income tax return, Included the income, and paid applicable tax

Step-by-Step Filing Process of Form No. 149 (Earlier 26A)

Before application filling. Income tax payer Always obtain a copy of the ITR, computation of income, and tax payment proof. And also match with AIS / 26AS. The taxpayer has to Maintain working papers for audit trail

• Step-1: Deductor Initiates Request: Processed through the TRACES system. Deductor initiates request on TRACES. Login → TRACES / Income Tax Portal and then Submit request for Form 149
• Step-2: Assign Chartered Accountant: Deductor assigns Chartered Accountant, or that Chartered Accountant provides the membership number of Chartered Accountant
• Step-3: Chartered Accountant Login: Chartered Accountant accesses request on portal and Examines documents and verifies compliance
• Step-4: Chartered Accountant Certifies Form: Uploads certification digitally (Chartered Accountant submits certificate (Annexure A)), and then the request moves to the income tax e-filing portal
• Step-5: Deductor Final Submission: Deductor reviews and submits income tax Form 149. After submission, an acknowledgment number is generated, which Confirms successful filing

Income Tax Relief:

Only principal tax deducted at source defaults are waived; interest remains payable. So we can say that income tax relief is only from principal tax, not from interest liability. Form 149 allows deductors to escape “assessee in default” status where the deductee has already paid tax, though interest liability continues.

·        Aspect	Treatment
Tax Deducted at Source Default	Not treated as assessee in default
Tax Demand	Dropped to extent covered
Interest u/s 201(1A)	Still payable

• We can understand practical scenarios via example: the company pays INE 10 lakh to the contractor (no tax deducted at source). The contractor includes income in the ITR and pays tax; Form 149 is support in the company avoiding default status, and the taxpayer still has to pay interest on it. Similarly, the next example is a short deduction due to a wrong rate, and relief is available for the shortfall portion via filling out income tax Form 149.

In Summary

• Form No. 149 (Earlier 26A) is a crucial tool to avoid double taxation; it does NOT eliminate interest exposure, however. – Form No. 149 (Earlier 26A) Requires Strong documentation and Matching with ITR + AIS/26AS. – Form No. 149 (Earlier 26A) Useful in Tax Deducted at Source scrutiny cases, default notices, and compliance clean-up.
• Normally the income tax dept. observed taxpayers used to make the common mistakes of not verifying whether income is reported, relying only on Form 26AS without ITR confirmation, and delaying filing Form 149, which has impacted that increased interest liability and also incorrect PAN mapping.
  • Old Law (Income-tax Act, 1961): Section 201(1) + Rule 31ACB + Form 26A
  • New Framework (Income-tax Act, 2025): Section 398(2) + Rule 221 + Form 149
  • Conclusion: Merely renumbering, the concept remains the same. From 149 applicability when the deductor failed to deduct Tax Deducted at Source. The deductee filed ITR, included such income, and paid tax via certification through Annexure A by a chartered accountant.