Fees under section 234E

Issue/Justification

a) The levy of fees under section 234E has been a matter of great concern.

It is highly appreciable that the Government has taken an open mind while considering the problems of e-filing of statement of TDS /TCS and has extended the time only for Government deductors earlier. In fact, considering the difficulties being faced by the government deductors, the circular No. 7/2014 dated 4.3.14 was a step in the right direction. Since the above difficulty equally applies for other deductors also, one time amnesty is sought for all deductors with regard to all TDS statements pertaining to FY 2012-13 and FY 2013-14 to be submitted on or before a cutoff date to be decided appropriately.

b) According to the provisions of section 234E, where a person fails to deliver or cause to be delivered a statement within the time prescribed then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day during which the failure continues. But the amount of fee shall not exceed the amount of tax deductible or collectible, as the case may be.

Considering the hardships being faced by the taxpayers due to various reasons, penal fees for late filing of TDS returns need to be changed to period wise/ slab of days instead of current system.

Suggestion

It is highly appreciable that the Government has taken an open mind while considering the problems of e-filing of statement of TDS /TCS and has extended the time only for Government deductors earlier. In fact, considering the difficulties being faced by the government deductors, the said circular (No. 7/2014 dated 4.3.14) was a step in the right direction. Since the above difficulty equally applies for other deductors also, one time amnesty is sought for all deductors with regard to all TDS statements pertaining to FY 2012-13 and FY 2013-14 to be submitted on or before a cutoff date to be decided appropriately. 

It is suggested to follow day wise slab system & it may be taken as:

Period of Default Max. Fees u/s 234E
Up to 15 Days Rs. 500/- or tax amount, whichever is higher, but subject to maximum of Rs. 20,000/-.
From 15 Days to 1 Month Rs. 1000/- or tax amount, whichever is higher, but subject to maximum of Rs. 20,000/-.
From 1 Month On wards Rs. 1000/- + Rs. 200/- per day or tax amount, whichever is higher, but subject to maximum of Rs. 20,000/-.

 Issue/Justification

Section 234E provides for levy of fees of Rs 200 per day where there is delay in filing of quarterly TDS returns.

This penalty is being levied in all the cases on a causal manner without going into the facts of the case and verifying the reasons for delay in filing of TDS return.

This creates lot of difficulties for the tax payers, as even on account of genuine delay, there is a penalty.

Section 119 empowers CBDT to forego the levy of penalty under Section 234E if it feels necessary to do.

Suggestion

It is recommended that Section 234E be appropriately amended so that  no penalty is levied on a casual basis and at least notice initiating the proceedings is first issued before the levy of penalty

Source-  ICAI Pre- Budget Memorandum–2018 (Direct Taxes and International Tax)

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Category : Income Tax (26765)
Type : News (13432)
Tags : Budget (1951) Budget 2018 (394) ICAI (2539)

One response to “Section 234E- Penalty should not be levied on casual basis and needs to be rationalized: ICAI”

  1. ANIL GOYAL says:

    late fee at least should not be impose in case where tds statement is filed before he due date of filing of income tax return i.e 31st july, because purpose of section 234E is to ensure timely credit of tds in the hand of deductee

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