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Interest and Penalty on Violation of Tds Provisions

INTEREST & PENALTY ON VIOLATION OF TDS PROVISIONS

Penalty on late submission of TDS Return:

The time limit for submission of TDS return is mentioned in Rule 31A of Income Tax Rules. Accordingly the dates for submitting quarterly returns is as follows:

Quarter
for Government Departments
For other assesses
30th June
31st July
15th July
30th Sept.
31st Oct.
15th Oct.
31st Dec.
31st Jan.
15th Jan.
31st Mar.
15th May
15th May

If the returns are not submitted by the above dates then there is provision for imposing penalty in the statue. Until 1st July 2012, there was a provision to impose penalty of Rs. 100/- per day with a limit up to due TDS amount but from the above date this has been abolished and new section 271H and 234E have been introduced instead.

Section 271H: There is a provision made under this section regarding late submission of TDS and TCS return and on submission of wrong information. A penalty ranging between Rs. 10,000/- to Rs.1, 00,000/- can be imposed which can be exempted u/s. 273B on valid reasons. Apart from this, if it is proved that after depositing amount of TDS along with fee and interest, return for TDS is submitted within one year from the date of such deposit, then penalty u/s. 271H shall not be imposed.

Section 234E: There is a provision made under this section to impose penalty of Rs. 200/- per day on late submission of return for TDS and TCS after 1st. July 2012. It is necessary to deposit late fees prior to submitting return other wise the return will not be accepted. Although the amount of fee cannot exceed the due amount of TDS.

Interest on violation of TDS provisions:

Information regarding time limit for payment of TDS is provided in Rule 30 of Income Tax Rules, 1962:

On deduction of TDS by Government:

(i) If Tax is paid without Income Tax Challan then the payment should be made on the day of deduction.

(ii) If the TDS or Income Tax is due u/s.193 (1A) then the payment should be made within seven days from the end of month of deduction.

On deduction of TDS by others:

(i) If TDS is deducted in the month of March then up to 30th. April. (Notification no. 41dated 31.5.2010)

(ii) In case of other months, within 7 days from the end of month of deduction [section 201 (1A)].

If any person liable to deduct TDS does not deducts the same or does not deposits it timely after deduction shall be liable to pay Interest.

If any person liable to deduct TDS does not deducts the same or does not deposits it timely after deduction shall pay Interest as below-

On non-deduction of Tax -
If Tax is not deducted within specified period then interest @ 1% per month shall be charged for the period between date of deduction and date of actual deduction.
On non depositing of Tax after deduction. -
If the deducted Tax is not deposited till the specified date of deposit then interest @ 1.5% per month shall be charged for the period between deduction and deposit

Provisions of allowability of expenses on late deposit of TDS:

Any person liable to deduct TDS does not deduct the same then such expenses will not be allowed to him. If the deducted tax is deposited before the last date of submission of return for the year of deduction then the deduction of expenses can be availed in the same year but the deduction for the expenses will be allowed in next financial year if the TDS is deposited after the last date of submission of return.