Section 35 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
- (1)Every person being a manager at any time during the financial year shall be jointly and severally liable for the payment of any amount due under this Act in respect of the company for the financial year, if the amount cannot be recovered from the company.
- (2)The provisions of sub-section (1) shall not apply, if the manager proves that non-recovery cannot be attributed to any neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.
- (3)The provisions of this section shall prevail over anything to the contrary contained in the Companies Act, 2013 (18 of 2013).
- (4)In this section, "manager" shall include a managing director and both shall have the meaning respectively assigned to them in clause (53) and clause (54) of section 2 of the Companies Act, 2013 (18 of 2013).
Summary
- Managers can be held personally responsible for the company's unpaid tax if the government cannot get the money from the company itself.
- This liability is joint and several, meaning the government can go after one manager for the whole amount.
- This liability applies to any manager who worked for the company during the year the tax was owed.
- A manager can avoid this responsibility if they can prove the non-payment was not caused by their laziness or bad behavior.
- These rules take precedence over the standard laws found in the Companies Act of 2013.
- The term manager includes anyone acting as a managing director for the company.
Practical examples
FAQ
1. Can a manager be forced to pay a company's tax under Section 35 of the Black Money Act, 2015?
Yes, Section 35 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 makes managers liable if the tax cannot be recovered from the company.
2. How can a manager defend themselves under Section 35 of the Black Money Act, 2015?
Under Section 35 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, a manager is not liable if they prove the non-recovery wasn't due to their neglect, misfeasance, or breach of duty.
3. Does Section 35 of the Black Money Act, 2015 only apply to the Managing Director?
No, Section 35 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 states that "manager" includes a managing director and any person serving as a manager during that year.
Test yourself
Q1.Under Section 35 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, what must a manager prove to avoid personal liability?
Q2.To which time period does a manager's liability apply under Section 35 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015?
Q3.What happens if the Companies Act, 2013 conflicts with Section 35 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015?
Q4.Under Section 35 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, what is the nature of the manager's liability?