March 23, 2023

Once tax has been deducted on the income paid, the deductor is required to deposit tax and file a TDS return for the same. If the deductor of tax misses the deadline to deposit tax deducted and/or filing TDS return, then there are monetary consequences that will have to be borne. Filing of TDS return is important as it is a way to inform the government about the tax deducted from various taxpayers and deposited with the government.

The due date for depositing tax deducted for a month is the 7th of the succeeding month. For the taxes deducted in the month of March, the taxes must be deposited by April 7 (for the government) and April 30 (for other deductors). The TDS returns are required to be filed on a quarterly basis, i.e., by July 31, October 31, January 31 and May 31. However, there are certain exceptions to this rule.

If the deductor fails to deposit tax

However, if the deductor fails to deposit the tax deposited or does not furnish the TDS return on time, then there are penal consequences for the same.

Yashesh Ashar, Partner, Bhuta Shah & Co LLP – a chartered accountant firm says, “If the tax deductor fails to deposit the tax deducted by the due date, then interest will be levied. The rate of interest is levied at the rate of 1.5% per month from the date of deduction to the date of deposit. Further, if the deductor fails to deduct the tax (if liable), then also penal interest is levied. The penal interest is 1% per month from the date on which tax is deductible to the date on which tax is actually deducted. The penal interest is levied under section 201(1A) of the Income-tax Act, 1961. Apart from penal interest, deductor can be prosecuted under section 276B of the Income-tax Act which can lead to imprisonment of three months to 7 years and a fine.”

Type of default Penal interest Period for penal interest
TDS deducted but not deposited to the government 1.5% per month From the date of deduction to the date of deposit
TDS neither deducted nor deposited 1% per month From the date on which tax is deductible to the date tax is actually deducted

“The penal interest is applicable for every category of taxpayer i.e., individual, banks, other financial institutions etc. provided he/she has either failed to deduct tax or deducted but failed to deposit before the due date. The penal interest is payable before the filing of TDS return,” adds Ashar.

If the deductor fails to file a TDS return

It may happen that the deductor has deducted and deposited the tax to the government but has failed to file the TDS return. If the tax deductor fails to furnish the TDS return on time, then, here too, there are penal consequences.

Ashar says, “If a deductor fails to furnish TDS return on or before the due date, then he/she is liable to pay a late filing fee under section 234E of the Income-tax Act. A late filing fee of Rs 200 per day is levied until the TDS return is filed. Further, the assessing officer may levy a penalty under section 271H. The minimum penalty amount is Rs 10,000 and the maximum penalty amount is Rs 1 lakh. Do note that incorrect filing of TDS return can also attract penalty for maximum up to Rs 1 lakh.” However, do note that the late filing fee cannot exceed the TDS amount.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: