No filing or Late filing of TDS returns or TDS statement shall invite 2 penal consequence 1.Fee for late filing U/s 234E and 2. Penalty for late filing or Non filing of TDS statement U/s 271H.

Duties of the person liable to deduct/collect tax at source

  • He shall obtain Tax Deduction Account Number or Tax Collection Account Number (as the case may be) and quote the same in all the documents pertaining to TDS/TCS.
  • He shall deduct/collect the tax at source at the applicable rate.
  • He shall pay the tax deducted/collected by him to the credit of the Government.
  • He shall file the periodic TDS/TCS statements, i.e., TDS/TCS return.
  • He shall issue the TDS/TCS certificate in respect of tax deducted/collected by him.

Due Dates for filing of TDS/TCS return

The due dates for filing of statement of TDS i.e. TDS return for different quarters are as follows:

Date    of    ending    of the

quarter of the        financial
year

Due date for Government deductorDue date for any other deductor
30th June31st July of the financial year15th July of the financial year
30th September31st       October      of      the financial year15th      October      of      the financial year
31st December31st January of the financial year15th       January      of      the financial year
31st March15th May of the financial year immediately following the financial year in which deduction is made15th          May        of       the financial year immediately following the financial year in which deduction is made.

Now we will understand the provisions relating to penalty for not furnishing the TDS/TCS statement i.e. TDS/TCS return.

Fee U/s 234E for late filing of TDS Statement:

If you filed late income tax return, there is consequential penalty in form of interest u/s 234A if there was tax due as per return. Similarly in the same chapter new section 234E has been proposed to be effective from 1st of July 2012, with heading ‘Levy of Fee in certain case’ deductor will be liable to pay by way of fee of Rs 200 per day till the failure to file TDS statement continues, However, the total fee cannot exceed the amount of TDS deductible for which statement was required to be filed.

TDS/TCS return cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. It should be noted that Rs. 200 per day is not penalty but it is a late filing fee.

Computation of fee under Section 234E at the time of processing of TDS/TCS statement

Section 200A of the Income-tax Act provides for processing of TDS statements for determining the amount payable or refundable to the deductor. Provisions of Section 200A has been amended by the the Finance Act, 2015 so as to enable computation of fee payable under under section 234E at the time of processing of TDS statements.

As the mechanism of TCS statement is similar to TDS statement, a new section 206CB has been inserted by Finance Act, 2015 to provide for processing of TCS statements on the lines of existing provisions for processing of TDS statement contained in section 200A of the Income-Tax Act. The new section 206CB also provides for mechanism for computation of fee payable under section 234E at the time of processing of TCS statement.

Penalty for late filing or non- filing TDS statement

Similarly a new penalty provision has been inserted as section 271H which provides that a deductor shall pay penalty of minimum Rs 10,000 to Rs 1 lakh for not filing the TDS statement within one year from the specified date within which he was supposed to file the statement. This amendment is also effective from 1st July 2012. Penalty under section 271H will be in addition to late filing fees prescribed under section 234E.

Apart from delay in filing of TDS/TCS return, section 271H also covers cases of filing incorrect TDS/TCS return. Penalty under section 271H can also be levied if the deductor/collector files an incorrect TDS/TCS return. In other words, minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000 can be levied if the deductor/collector files an incorrect TDS/TCS return.

No penalty will be levied under section 271H for the failure to file the TDS/TCS return, if the person proves that after paying tax deducted/collected by him, along with the late-filing fee and interest (if any), to the credit of the Central Government, he had filed the TDS/TCS return before the expiry of a period of one year from the due date of filing the TDS/TCS return. In other words, no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied:

  • The tax deducted/collected at source is paid to the credit of the Government.
  • Late filing fees and interest (if any) is paid to the credit of the Government.
  • The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.

It should be noted that the above relaxation is applicable only in case of penalty levied under section 271H for delay in filing the TDS/TCS return and not in case of filing incorrect TDS/TCS statement.

Apart from above relaxation, in following two cases the taxpayer can get relief from penalty under section 271H:

  • Under section 273A(4) the Principal Commissioner of Income-tax or Commissioner of Income-tax has power to waive or reduce the penalty levied under the Income-tax Act. Penalty can be waived or reduced by the Commissioner of Income-tax if the conditions specified in section 273A(4) in this regard are satisfied.
  • Apart from shelter of section 273A(4), section 273B also provides immunityfrom penalty in genuine cases. As per section 273B, penalty under section 27111 will not be levied if the taxpayer proves that there was a reasonable cause for failure.

Thus, if the present due time for filing TDS statement is taken, the time up to which the penalty u/s 271H cannot be imposed are explained for any tax deduction for FY 2014-15

Sl. No

TDS Statement

Due date

Date up to which no penalty u/s 271H can
be imposed

1

30th June

15th July 2014

15th July 2015

2

30th September

15th October 2014

15th October 2015

3

31st December

15th January 2015

15th January 2015

4

31st March

15th May 2015.

15th May 2015

At the time of preparing statements of tax deducted, the deductor is required to mandatorily quote:

(i)  his tax deduction and collection account number (TAN) in the statement;

(ii) his permanent account number (PAN) in the statement except in the case where the deductor is an office of the Government( including State Government). In case of Government deductors “PANNOTREQD” to be quoted in the e-TDS statement;

(iii) the permanent account number PAN of all deductees;

(iv)furnish particulars of the tax paid to the Central Government including book identification number or challan identification number, as the case may be.

(v) furnish particular of amounts paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax u/s 197 by the assessing officer of the payee.

Some Practical Examples

Question- 1  The quarterly statement of TDS i.e. TDS return for the first quarter of the year 2014-15 is filed by Mr. Kapoor on 4-4-2015. Tax deducted at source during the quarter amounted to Rs. 8,40,000. What will be the amount of late filing fees to be paid by him for delay in filing the TDS return?

 Answer  In case of Non-Government deductor, the due date for filing of TDS return for the first quarter of the year 2014-15 i.e. April 2014 to June 2014 is 15th July, 2014. The return is filed on 4th April, 2015, thus there is a delay of 263 days as computed below:

 ParticularsDays
July 2014 16
August 2014 31
September 2014 30
October 2014 31
November 2014 30
December 2014 31
January 2015 31
February 2015 28
March 2015 31
April 2015 4
 Total263

From the above computation it can be observed that there is a delay of 263 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 263 days the late filing fees will come to Rs. 52,600.

Question- 2-  The quarterly statement of TDS i.e. TDS return for the second quarter of the year 2014- 15 is filed by Essem Ltd. on 4-4-2015. Tax deducted at source during the quarter amounted to Rs. 8,400. What will be the amount of late filing fees to be paid by the company for delay in filing the TDS return?

Answer-  In case of Non-Government deductor, the due date of filing the TDS return for the second quarter of the year 2014-15 i.e. July 2014 to September 2014 is 15th October, 2014. The return is filed on 4th April, 2014, thus there is a delay of 171 days as computed below:

ParticularsDays
October 2014 16
November 2014 30
December 2014 31
January 2015 31
February 2015 28
March 2015 31
April 2015 4
 Total171

From the above computation it can be observed that there is a delay of 171 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 171 days the late filing fees will come to Rs. 34,200. However, the late filing fees cannot exceed the amount of tax deducted at source. TDS for the quarter is Rs. 8,400 and hence late filing fees shall beRs. 8,400.

Question 3 – The quarterly statement of tax collected at source i.e. TCS return for the first quarter of the year 2014-15 is filed by Mr. Krunal on 4-8-2014. Tax collected at source during the quarter amounted to Rs. 84,000. What will be the amount of late filing fees to be paid by him for delay in filing the TCS return?

Answer- In case of Non-Government deductor, the due date of filing the TCS return for the first quarter of the year 2014-15 i.e. April 2014 to June 2014 is 15th July, 2014. The return is filed on 4th August, 2014, thus there is a delay of 20 days as computed below:

ParticularsDays
July 2014 16
August 2014 4
 Total20

From the above computation it can be observed that there is a delay of 20 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 20 days the late filing fees will come to Rs. 4,000.

Question 4- The quarterly statement of tax collected at source i.e. TCS return for the second quarter of the year 2014-15 is filed by Mr. Raja on 4-12-2014. Tax collected at source during the quarter amounted to Rs. 2,520. What will be the amount of late filing fees to be paid by him for delay in filing the TCS return?

Answer- In case of Non-Government deductor, the due date of filing the TCS return for the second quarter of the year 2014-15 i.e. July 2014 to September 2014 is 15th October, 2014. The return is filed on 4th December, 2014, thus there is a delay of 50 days as computed below:

ParticularsDays
October 2014 16
November 2014 30
December 2014 4
 Total50

From the above computation it can be observed that there is a delay of 50 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 50 days the late filing fees will come to Rs. 10,000. However, the late filing fees cannot exceed the amount of tax collected at source. TCS during the quarter amounts to Rs. 2,520 and hence, late filing fees shall be Rs. 2,520.

Question 5 – The quarterly statement of Tax deducted at source i.e. TDS return for the last quarter of the year 2014-15 is not filed by Mr. Raj till 15th May, 2015. Can he file the TDS return of last quarter of the year 2014-15 after 15th May, 2015 without payment of any late filing fees?

Answer- In case of Non-Government deductor, the due date of filing the TDS return for the last quarter of the year 2014-15 i.e. January 2015 to March 2015 is 15th May, 2015. The return is not filed till 15th May, 2015and hence late filing fees under section 234E of Rs. 200 per day of default will be levied. TDS return cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. Hence, in this case, Mr. Raj cannot file the TDS return without payment of late filing fees of Rs. 200 per day.

Question 6 – The quarterly statement of tax deducted at source i.e. TDS return for the first quarter of the year 2014-15 is filed by Mr. Krunal on 4-4-2015. Tax deducted at source during the quarter amounted to Rs. 84,000. Before filing the TDS return he has paid the TDS, interest and late filing fees to the credit of the Government. Will he be liable to penalty under section 271H for delay in filing the TDS return?

Answer- Penalty under section 271H can be levied for delay in filing the TDS return. In this case, the due date of filing the TDS return for the first quarter of the year 2014-15 i.e. April 2014 to June 2014 is 15th July, 2014. The return is filed on 4th April, 2015, thus there is a delay of 263 days (i.e. less than a year). As per section 271H(3) no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied :

  • The tax deducted/collected at source is paid to the credit of the Government.
  • Late filing fees and interest (if any) is paid to the credit of the Government.
  • The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.

In the present case, all the aforesaid conditions are satisfied because the delay in filing the TDS return is of less than 1 year and interest and late filing fees are paid before filing the TDS return, thus penalty under section 271H will not be levied.

The same provision as discussed above will apply in case of delay in filing the statement of tax collected at source i.e. TCS return.

Question 7- The quarterly statement of tax deducted at source i.e. TDS return for the first quarter of the year 2014-15 is filed by Mr. Rahul on 20-7-2015. Tax deducted at source during the quarter amounted to Rs. 1,84,000. Before filing the TDS return he has paid the TDS, interest and late filing fees to the credit of the Government. Will he be liable to penalty under section 271H for delay in filing the TDS return?

Answer- Penalty under section 271H can be levied for delay in filing the TDS return. The due date of filing the TDS return for the first quarter of the year 2014-15 i.e. April 2014 to June 2014 is 15th July, 2014. The return is filed on 20th July, 2015, thus there is a delay of 370 days (i.e. more than a year). As per section 27 111(3) no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied :

  • The tax deducted/collected at source is paid to the credit of the Government.
  • Late filing fees and interest (if any) is paid to the credit of the Government.
  • The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.

In the above case, the delay is of more than 1 year and hence the above immunity will not be available. Thus, the Assessing Officer can levy penalty under section 271H. Minimum penalty of Rs. 10,000 and maximum penalty of Rs. 1,00,000 can be levied by the Assessing Officer. However, Mr. Rahul has following two remedies to get relief from penalty:

  • He can apply to Principal Commissioner of Income-tax or Commissioner of Income-tax under section 273A(4) to seek relief from penalty.
  • He can seek relief under section 273B by proving that there was a reasonable cause for failure.

The same provision as discussed above will apply in case of delay in filing the statement of tax collected at source i.e. TCS return.

Question 8-  The quarterly statement of tax deducted at source i.e. TDS return for the first quarter of the year 2014-15 is filed by Mr. Sharma on 10-7-2014. The particulars of the tax deducted at source as mentioned in TDS return are incorrect. Will he be liable to pay penalty under section 271H for delay in filing the TDS return and for furnishing the inaccurate particulars in the return?

 Answer–  In the present case Mr. Sharma has filed an incorrect TDS return and hence he shall be held liable to pay penalty under section 271H. Minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000 can be levied. Mr. Sharma will have no remedy under Section 271H(3) to claim relief from penalty for furnishing of inaccurate particulars in the return. 11owever, the taxpayer can seek relief in the following way:

  • He can apply to Principal Commissioner of Income-tax or Commissioner of Income-tax under section 273A(4) to grant relief from penalty.
  • He can seek relief under section 273B by proving that there was a reasonable cause for failure.

The same provision as discussed above will apply in case of delay in filing the statement of tax collected at source i.e. TCS return.

(Article was first published on 13.04.2012 and republished with amendments)

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