- Late fees for TDS/TCS returns U/s 234E :-W.e.f. 1st July, 2012 if TDS return is filed late, then U/s 234E late fees of Rs. 200/- per day will have to be deposited before filing TDS / TCS return, however it is specified that late fees should not exceed TDS/TCS deductible/collectible for that quarter. In addition to this, if TDS and late fee and interest due thereon as well as TDS return is not deposited within one year from the due date then penalty U/s 271H ranging from 10 thousand to 1 lakh may be imposed.
Provisions of Sec. 234E has been made applicable w.e.f. 1st July, 2012. It states that “Amount of late fee @ Rs. 200/- per day shall be paid before delivering a TDS statement”, It means that any late fee should have been deposited just at the time of delivering TDS statement and not later than this.
Once the TDS statement has been accepted without late fee, then such late fee cannot be recovered later on. However this late fee cannot be waived later on even for any reasonable cause, because it is not a penalty but a late fee.
As per provisions of Sec. 234E(4) late fee is applicable for “TDS statement which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after 1st day of July 2012”.
Late fee cannot be recovered for TDS statements which were due for F.Y. 2011-12 as well as TDS statement late fee cannot be recovered for F.Y. 2012-13 or till today, if not collected at the time of delivering TDS statement by the NSDL (Income Tax department).
If a person has failed to deduct TDS or failed to collect TCS then also late fee is not applicable for such period of failure, because late fee under section 234E is imposable only in cases of default where the assessee has failed to deposit tds return (statement) for tax deducted or collected at source. So it does not cover cases where assessee has failed to deduct TDS or failed to collect TCS. e.g. a person Mr. A has paid interest of Rs. 55000/- to Mr. B on 10th May 2013, and deducted TDS of Rs. 5500/- on 10th May 2013 then this tds is deposited on or before 7th Jun, 2013 and TDS return for this period becomes due on 15th July, 2013. Here, if the tds return (statement) is filed on 5th Nov., 2013 then there is a delay of 112 days, but if this TDS was failed to be deducted on 10th May 2013 and later on deducted on 12th August, 2013, then this tds has to be deposited on or before 7th Sept.,2013 and tds return for this (second) quarter has to be deposited on or before 15th Oct., 2013. So the TDS return has to be filed for the quarter during which tds was deducted and not for the quarter during which tds was deductible i.e. even if Rs. 55000 has been paid on 10th May in first quarter (1April to 30th Jun), but since tds was not deducted in the first quarter and tds of Rs. 5500/- was deducted in the second quarter i.e. on 12th August 2013 then this sum will be included in the 2nd quarter and not in the first quarter so that delayed filing of tds return for second quarter will be counted only from 15th oct. 2013 (due date of tds return for second quarter) to 5th nov., 2013 (date of filing of tds return) i.e. delay of only 20 days.
Section 200(3) of the act also says that tds statement shall be filed after paying the tax deducted and rule 31A which talks about filing of tds returns where deduction is made under section 192 to section 196D, so it does not impose liability to file tds statement for tax deductible but not deducted..
On the other hand it is also pertinent to note that the law has not made any person responsible, to deposit late fee, in case of default in depositing late fee alongwith tds statement, which can be inferred from the provisions of Sec. 204 of the act, which states as under:-
“Sec. 204 of the act has made persons responsible for Sec. 190 to Sec. 203AA and Section 285 this phrase does not cover Section 234E, it means no one is responsible for default U/s 234E.
Therefore if any late fee is due and not deposited alongwith the tds statement none can be held responsible to deposit it.
Demand of late fee cannot be raised also by way of processing of TDS statement, because Sec 200A(1) of the act talks about tds returns by a person deducting any tds, so it does not cover cases of tax deductible but not deducted at all, the provisions of Sec. 200A of the act also does not permit processing of tds statement for default in payment of late fee, except any arithmetical error, or incorrect claim, or default in payment of interest, any tds payable or refundable etc. Section 200A also does not cover processing in cases of tax collection or collectible at source (TCS). An assessee cannot be treated in default also U/s 201(1) or 206C(6A) due to non payment of late fee. And even the TDS return(statement) is also not treated as defective, like non payment of tax and interest treats an income tax retrun as defective U/s 139(9) of the act. If a person has not paid late fee then, even though it shall not be charge on all assets because Sec. 201(2) & 206C(8) does not cover late fee. Sec 234E also doesn’t say that in case of default in depositing late fee, the defaulting persons will be deemed an assessee in default.
In view of the above late fee cannot be recovered later on, by way of any notice , neither notice of demand U/s 156 can be issued for this. If any notice is issued by way of processing tds statement U/s 200A, then apply for rectification of mistake U/s 154 of the act or directly file an appeal before Commissioner of Income Tax (Appeals).
CA Rajesh Mehta Indore
rajeshmehtaindore @ gmail.com