Non compliance with TDS provisions can result in :

1. Disallowance u/s. 40(a) (ia) of Income Tax Act, 1961 (Act).

2. Raising of demand u/s. 201(1) of the Act.

3. Charging of Interest u/s. 201(1A) of the Act-

4. Levying penalty u/s. 271C of the Act upto the amount of tax in default  for Failure to deduct tax at source, wholly or partly, under sections 192 to 196D (Chapter XVII-B) or failure to pay wholly or partly tax u/s 115-O(2) or second proviso to section 194B.

5. Levying of penalty u/s. 221 of the Act for non payment of demand raised.

6. Prosecution u/s.276B of the Act involving rigorous imprisonment upto 7 years with fine.

7. Penalty u/s. 271BB of the Act for failure to apply for TAN or non-quoting thereof.

8. Penalty u/s. 272A (2)(k) of the Act for non filing of TDS returns.

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

10. Penalty u/s. 271H  for late filing or non- filing TDS statement

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0 responses to “10 Consequences of Non compliance with TDS provisions”

  1. dattatreyahg says:

    good. some stringent measures to deal with defaulting deductors. but something more needs to be done to protect deductees interests. Tax authorities should automatically demand corrective actions from deductors in all cases where form26as shows tds amounts credited,but are indicated as U (ie Unmatched) till they are shown as F (fully matched). Deductees should not be harassed by asking them to take this up with/persuade deductors ,as deductors dont care for such pleadings from deductees as deuctee does not have the legal power that the tax authorities have. And, with an U status,deductee is not allowed to claim that tds amont in his IT return. One more thing.Deductees,normally, pay off full amount of tax without bothering about tds amount deducted,if they dont receive tds certifictes in time(even though it amounts to paying 10% extra), just to avoid stringent consequences of not filing IT returns by due date.(One such consequce is losing the benefit of booking certain losses that can be carried forward.Anoher cosequence is being made ineligible for filing revied IT return. There may be many more that I have not come across yet). These are all CATCH22 situations which cannot be handled by deductee. Only Tax authorities can and should offer solutions for such problems of deductees in the true spirit of CITIZENS CHARTER,which has been hailled as a great REFORM in tax administration by no less a person than Finance Minister. Some of these problems were not there prior to introduction of FORM26as. These problems therefore appear to have arisen because of lack of application of proper thinking at the time of introduction of FORM26as ,PARTICULALY FROM THE POINT OF VIEW OF THE DEDUCTEE.Everything seems to have been seen only from the viewpoint of TAX COLLECTION. These observations are made based on problems I have actually faced. If there is anything wrong in them, I am open to correction. I only hope the Tax authorities do offer solutions in double quick time and tax professionals also help in this regard.

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