RECOMMENDATION FOR REDUCING THE FEE UNDER SECTION 234E FOR DEFAULT IN FURNISHING STATEMENTS OF TDS AND TCS FROM RS.200/- PER DAY TO RS.100/- PER DAY
The levy of mandatory fee u/s. 234E at the rate of Rs.200/- per day for default in furnishing of Statements of TDS u/s. 200(3) and TCS u/s. 206C(3) has been a matter of debate ever since it came to be introduced with effect from 1.7.2012. While in principle, courts have justified the levy as being constitutional, it is widely believed that this levy is harsh keeping in view the fact that the person committing any default for delayed deduction or payment of tax is already inflicted with penal interest of 12% or 18% per annum. Moreover, in cases of grave default of non-furnishing of such Statements beyond one year, there is also a provision for levy of penalty of Rs.10,000/- to Rs.1,00,000/-.
In fact, prior to the introduction of this mandatory levy, the penalty for similar defaults as provided u/s. 272A(2)(k) was imposable at Rs.100/- per day. In cases of any default by a Government Office, while there is no
provision for levy of fee u/s. 234E, the penalty for similar defaults u/s. 272A(2)(m) is prescribed at Rs.100/- per day. In view of the above, there is a case for reduction of the fee u/s. 234E from Rs.200/- per day to Rs.100/- per day.
19.2 Accordingly, it is recommended that sub-section (1) of Section 234E be amended as follows:
“234E. (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of one hundred rupees for every day during which the failure continues.”