Consequences for Tds Non Compliance

Brief Discussion 

A various provision has been laid down under the Income Tax Act, 1961 regarding deduction of TDS when the amount exceeds the prescribed amount under the act. Numerous section has been enumerated.

Consequences for Tds Non Compliance

As we are well aware of many of the basic provisions of TDS under Income TAX, we tend to ignore the consequences of these provisions and we also tend to forget this. The main Provision must be adhered with the provision of TDS Law, if non-compliance made then consequences of not deducting it on time, or deducting but not paying it to the government before the due date will be hard. 

Disallowance of expenditure under section 40(a)(i) and section 40(a)(ia)

When the payments made to the resident, then Tds is required to be deducted if it crosses the threshold of the prescribed section thereof.

If TDS is not deducted then 30% disallowance is made as a claim of Expenditure of Payment in the Profit and Loss Account. However, the amount of disallowed will be allowed as a deduction in the subsequent previous year in which TDS is paid to the credit of the central government.

Demand Raised u/s 201(1) of the Act 

When the person is liable to deduct TDS  who has failed to deduct whole or part of TDS or after deduction fails to deposit whole or part of the TDS. He shall be treated as assessee in default. However, in the following cases, the assessee will not be treated as Assessee in Default. That cases are as mentioned below, that is the assessee:-

(i)  He has furnished his ITR (return of income) under subsection 1 of section 139;

(ii) All such sum required for calculating  for computing income in such return of income must be taken by him; and

(iii) All the relevant tax has been  paid due on the income declared by him in such return of income,

Further also provided that the person furnishes a  prescribed certificate to this effect from an accountant  

The interest levied u/s. 201(1A) of the Act

The person who is liable to deduct TDS but  does not deduct the whole or partial amount of the tax or after deducting fails to pay the whole or part of the tax as required by or under this Act, he liable to pay simple interest,

 (i) at one percent for every month or part of a month on the amount of such tax from the date on which such tax was deductible up to the date on which tax was required to be deducted; and

 (ii) At 1.5% for every month or part of a month on the amount of such tax  that will be levied from the date on which such tax was required to be deducted up to the date on which such tax is actually paid,

and such interest shall be paid before furnishing the TDS statement.

Levying penalty u/s. 271C of the Act

This section levy penalty to the extent of Tax amount in default, not exceed with this limit thereof.

Penalty u/s. 271H (for late filing or non-filing  of TDS statement)   

The penalty of the sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees.

TDS Return

Sec. 234E( fees  for late filing of TDS Statement)

Sec 234E levy Fine of Rs. 200/-  for default in filing statement for every day during which the failure continues will be levied.

Section 272A (2)(k) -Penalty for non-filing of TDS returns

A sum of one hundred rupees for every day during which the failure continues shall be paid by the Doctor.


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