A sole proprietor who is required to deduct tax at source pays a resident ₹61 lakh of commission in tax year 2026-27 and deducts no tax at all. The commission is otherwise deductible and the…

Section 35(b)(i) of the Income-tax Act, 2025 disallows 30% of a sum payable to a resident on which tax deductible at source has not been deducted, so ₹18.30 lakh is disallowed (and allowed in the year the tax is later paid). Disallowance of the whole ₹61 lakh is the rule of section 35(b)(ii) for payments to non-residents, and ₹1.22 lakh is the 2% tax that should have been deducted, not the disallowance.