Consequence on default in TDS

SAMEER AHMED , Last updated: 09 March 2015
Share

Here we will get to understand that what defaults are oftenly occurs in TDS and how we can prevent ourselves from the penalties and fines in TDS under section 201(1), 201(1A) and 234E of Income tax act 1961.

If we do a bit more focus on it we can easily prevent them and proceeds ahead without any Defaults.

Generally Following are the Common Reason of defaults in TDS:-

1. Late Deduction of TDS

2. Short Deduction of TDS

3. Late Payment of TDS

4. Short Payment of TDS

5. late Filing of Return

1. Late/short deduction of TDS: Its means that the TDS was not deducted Entire or partly amount at the point of deduction of TDS.

Now a question will be arising. What will be the point of deduction? Let’s see the answer in this chart

Point of deduction of TDS (When the TDS to be deduct)

In Salary: At the time of payment

Others: When income paid or credited to the account whichever is earlier

What if there is late/short deduction of TDS

CONSEQUENCES OF DEFAULT: When Fail to Deduct or short deduction of TDS

Default/ Failure	Section	Nature of demand	Quantum of demand or penalty
Failure to deduct tax at Source	201(1)	Tax demand	Equal amount of tax deductible but not deducted
	201(1A)	Interest	@1 % p.m. or part of month of tax deductible till actual Deposited.
	271C	Penalty	Equal amount of tax deductible but not deducted.

2. Late/short Payment of TDS: It means that the Entire or Partly amount not deposited on or before due shall be liable to penalty and deemed as defaulter in TDS following Penalty shall be charge.

Now what are the Due dates?

Due Date for depositing TDS

Quarter	Salary	Other than Salary
April – February	7th of next month	7th of next month
March	30th April	30th April

What if the TDS is deposited on or before due date?

CONSEQUENCES OF DEFAULT: In case Non Deposited or Short Deposited

Default/ Failure	Section	Nature of demand	Quantum of demand or penalty
Failure to deposit tax at source	201(1)	Tax demand	Equal to tax amount not deposited
	201(1A)	Interest	@1.5% p.m. or part of month of tax not deposited
	276B	Prosecution	Rigorous imprisonment for term for a minimum of 3 months which may extend to 7 years and with fine

3. Late filing of Return: It means late return filing after the Due date and it shall be liable to pay penalty. The due date is different for the Govt Deductor and Non Govt Deductor.

Now what are the Due dates for filing the TDS RETURN?

DUE DATE OF FILING TDS RETURN

Quarter	Non-Govt Deductor (24Q,26Q,27Q)	Govt Deductor (24Q,26Q,27Q)
First (Apr-Jun)	15th July	31th July
Second (Jul-Sep)	15th Oct	31th Oct
Third (Oct –Dec)	15th Jan	31th Jan
Fourth(Jan-March)	15th May	15th May

When the return not filed on or before the due date as given above and prescribed, the following penalty shall be liable to pay by defaulter

CONSEQUENCES OF DEFAULT :- When Return Not Filed Timely

Default/ Failure	Section	Nature of demand	Quantum of demand or penalty
Failure to file TDS return in time	234E	Fine	Rs. 200 per day will be levied on the deductor, as long as TDS Statement is not filed upto the maximum of TDS amount
Failure to furnish prescribed statements u/s 200(3)	272A(2) (k)	Penalty	Rs. 100 every day during which the failure continues subject to maximum of TDS amount
If deductor exceeds one year time limit to File TDS Statement. If deductor furnishes Incorrect details like PAN, TDS Amount, Payment of Challan etc.	271H	Penalty	Deductor has to pay a penalty Ranging from minimum of Rs. 10,000/to One Lac rupees