Tax Deducted Source (TDS) is a concept of deducting tax at the very source of income with the intention of curbing tax evasion and maintaining a steady flow of income to the government.
The deductee can get the credit of the tax so deducted on the basis of form 26AS (annual consolidated credit statement) or TDS Certificate.
Default in respect to TDS
As per provisions of Income Tax Act,1961, Any person who made the default in Tds provisions shall be liable for the interest as defined under section 201. The type of defaults is as follows:
- The person who did not deduct tax on the whole or any part of the payment on which tax liable to be deducted
- The person who fails to remit or pay the tax, which was deducted as per TDS provisions.
Interest liability under section 201
In the case of non-deduction of TDS
Where an assessee liable to deduct TDS, but not deducted tax on the whole or any part of the amount, such assessee in default is liable to pay simple interest under section 201 at the rate of 1% for every month or part of the month on the amount of such tax from the date on which tax was deductible to the date on which such tax was actually deducted.
In the case of Tax deducted but not paid
Where an assessee liable to deduct TDS, has deducted the tax on the amount, But, the tax has not been paid, then such assessee in default is liable to pay simple interest under section 201 at the rate of 1.5% for every month or part of the month on the amount of such tax from the date on which tax was deducted to the date on which such tax was actually paid.
Non-applicability of Section-201
The assessee who failed to deduct tax on the whole or any part of the amount credited or paid to the resident payee or recipient was not deemed to be an assessee in default under section-201 if the following conditions have been satisfied.
- The resident payee or recipient should furnish his return of Income under section-139 of the Income-tax, 1961.
- The resident payee or recipient should have taken such credit or payment as an income for the computation of income in such return of income filed under sec- 139.
- The resident payee or recipient has to pay the tax due in respect of the income declared by him in such return of income filed under sec-139 of the Income-tax act.
As we already know that the assessee shall be liable for the interest if he has not paid the TDS or does not file the TDS return within the due date. Now let’s discuss the due dates of TDS
The due date for Payment of TDS Return
As per provisions of Income Tax Act, 1961, The Assessee shall have to deposit the TDS within 7 days from the end of the month in which the TDS has been deducted except for the month of march where assessee would require to deposit TDS till 31st March.
The due date for filing of TDS Return
As per Rule 31A, The TDS return shall be required to file on a quarterly basis. The due dates for the filing of TDS return shall be as follows:
|Ending date of the Quarter of the Financial Year||Due Date|
|1||30th June||31st July of the respective financial year|
|2||30th September||31st October of the respective financial year|
|3||31st December||31st January of the respective financial year|
|4||31st March||31st May of the financial year immediately subsequent to the financial year in which deduction was made|
The penalty that can be levied with respect to TDS
The Penalty that can be levied in respect of TDS shall be as follows
- Penalty in respect to non-deduction of TDS or non-payment of TDS
- Penalty in respect to late filing of TDS
Penalty for non-deduction or non-payment of Tds
As per the provision of section-271C of the Income Tax Act,1961 there shall be levied an penalty of an amount equal to the tax amount which is failed to deduct or pay.
Penalty for Late filing TDS
- Penalty under section-234E
- Penalty under section-271H
The penalty under section 234E
As per the provision of section-234E, a penalty of Rs.200/- per day shall be levied till the date of filing Tds statements for default in furnishing the statements.
The penalty under section 271H
As per the provision of section-271H, a penalty shall be levied if the assessee fails to file the TDS Statement within the due date or incorrect filing of TDS return.
The penalty under sec-271H shall be a minimum of Rs.10,000/- which may be extended to Rs.1,00,000/-.
Note: No penalty shall be levied under section 271H, if the tax deducted or collected is paid to the credit of the government along with the fee and Interest (if any).and the Tds return should have been filed before the expiry of the period of one year from the respective due date.