1. Disallowance of expenditure; u/s 40(a)(i) of and section 40(a)(ia), if Tax not deducted / not deposited till the due date of filing of return;
a. Payment to Non-resident ;100% expenses disallowed
b. Payment to resident ;30% expenses disallowed
However, if tax is deducted or deposited in subsequent year, the expenditure so disallowed shall be allowed as deduction in that year.
2. Interest u/s 221 on TDS amount (default u/s 201A)
a. Non-deduction of TDS, (whole or part) ; 1% pm, from the date, the TDS was to be deducted to the actual date of deduction,
b. Non-payment of TDS ; 1.5% pm, From the date of deduction to date of actual payment
3. Penalty & Prosecution;
a. u/s 271C for Non-deduction /non-payment of TDS;
Penalty of an amount equal to tax not deducted/paid could be imposed u/s 271C. However, the total amount of penalty shall not exceed the amount of tax in arrears.
b. u/s 234E for delay in filing TDS /TCS returns;
Penalty of Rs.200 / day, for the delay in filing TDS or TCS returns after the specified due date, However, such a penalty will not exceed the amount of TDS for which the statement was required to be filed.
c. u/s 271H for incorrect information/fails to submit return within due date;
Also, a penalty from Rs.10,000 to Rs.1 lakh is leviable u/s 271H if a company provides incorrect information or fails to submit the returns within the specified due date. This penalty will be charged in addition to the penalty u/s 234E.
Exception; No penalty u/s 271H if the following conditions are satisfied:
a. The TDS is paid to the credit of the government.
b. Late filing fees and interest (if any) is paid
c. The TDS/TCS return is filed before the expiry of one year from the due date specified in this behalf.
Punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, along with fine.
4. Mode of payment of TDS
a) E-Payment: All the corporate assesses
b) All assesses (other than company) to whom provisions of section 44AB applicable (i.e Tax Audit).
c) Physical Mode: By furnishing the Challan No. 281 in the authorized bank branch
Compiled by CA. M.S.Prasad, FCA, MBA, LL.B, B.Com(H),
+91 88022 53937, 0120-713 8235, camsprasad@gmail.com
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What is the meaning of ” due date ” .
Does it include the extended date of filing of return u/s 119 of the Income Tax Act.
Interest on non payment of TDS mentioned in article 5% pm is this correct? In my opinion it is 1.5% pm from the date of deduction till the date of payment.