Non compliance with TDS provisions can result in
In case of payments made to resident, the deductor is allowed to claim deduction for payments as expenditure in the previous year of payment, if tax is deducted during the previous year and the same is paid on or before the due date specified for filing of return of income under section 139(1) of the Act.
In case of non-deduction or non-payment of tax deducted at source (TDS) from certain payments made to residents, than 30% of the amount of expenditure on which tax was deductible is disallowed under section 40(a)(ia) for the purposes of computing income under the head “Profits and gains of business or profession”. However the amount disallowed will be allowed as deduction in the subsequent previous year in which TDS is paid to the credit of central government.
Any person whose is liable to deduct TDS has failed to deduct whole or part of TDS or after deduction fails to deposit whole or part of the TDS to the credit of central government. He shall be treated as assessee in default in rest of such tax not deducted or deposited.This applies to employer refer in section 192(1A).
Provided that any person who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid/credited to a resident shall not be deemed to be an assessee in default in respect of such tax if such resident-
(i) has furnished his return of income under section 139;
(ii) has taken into account such sum for computing income in such return of income; and
(iii) has paid the tax due on the income declared by him in such return of income,
and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed
Any person whose is liable to deduct TDS does not deduct the whole or any part of the tax or after deducting fails to pay the whole or part of tax as required by or under this Act, he liable to pay simple interest,
(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid,
and such interest shall be paid before furnishing the TDS statement .
Provided that in case any person whose is liable to deduct TDS ,fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso of section 201(1) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident
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.
When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable be liable, by way of penalty, to pay such amount as the Assessing Officer may direct, and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears . However before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard :
If a person fails to pay to the credit of the Central Government,—
(a) the tax deducted at source by him as required by or under the provisions of Chapter XVII-B; or
(b) the tax payable by him, as required by or under—
(i) sub-section (2) of section 115-O; or
(ii) the second proviso to section 194B,
he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.
If a person who is required to quote his “tax deduction account number” in the challans or certificates or statements or other documents , quotes a number which is false, and which he either knows or believes to be false or does not believe to be true, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees.
The deductor shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues
Fine of Rs. 200/- every day during which the failure continues will be levied on deductor as long as the default continues, subject to a maximum of TDS amount.
Penalty of sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees.
No penalty shall be levied for the failure to file TDS/TCS return on time,if the person proves that after paying tax deducted or collected along with the fee and interest, if any, to the credit of the Central Government, he has filed the return before the expiry of a period of one year from the time prescribed for delivering or causing to be delivered such statement.
(Republished With Amendments)