194ia
This query is : Resolved
23 January 2014
value of consideration is 20500000 whose payments are made in instalments of Rs. 2000000 on 15/5/2013 and 18500000 on 6/9/2013.but no tds has been deducted on instalmnts.suppose if we deduct tds on 24/1/2014.what are the penal consequences? what are the interest and penalty that are going be imposed ? any remedy available......pls reply
27 January 2014
i hav yet not received answer of my query..........plz anybody answer
14 July 2024
In the scenario described, where TDS (Tax Deducted at Source) was not deducted on installment payments made , but is being considered for deduction on 24/1/2014, let's address the penal consequences, interest, and potential remedies available:
### Penal Consequences:
1. **Interest on Late Deduction (Section 201(1A)):**
- If TDS is deducted late, interest is levied at a rate of 1% per month or part thereof, from the date on which the tax was deductible to the date of actual deduction.
- Interest is calculated on the amount of tax deductible, i.e., on ₹20,500,000 in your case.
2. **Penalty for Non-Deduction (Section 271C):**
- Section 271C of the Income Tax Act specifies a penalty equal to the amount of tax that was required to be deducted but was not deducted.
- The penalty is in addition to the interest charged under Section 201(1A).
3. **Interest on Late Payment (Section 201(1A)):**
- Apart from interest on late deduction, if the TDS amount is paid late after deduction, interest under Section 201(1A) is also applicable at 1% per month or part thereof, from the date of deduction to the date of actual payment.
### Calculation Example:
- **Interest on Late Deduction:**
- Period: May 2013 to January 2014 = 8 months
- Interest = ₹1,64,000
- **Interest on Late Payment (from 24/1/2014 to actual payment date):**
- Interest is computed similarly from the date of deduction to the date of payment.
### Remedy Available:
To address the situation:
- **Rectification and Payment:** Deduct the TDS as soon as possible and pay the deducted TDS along with interest to the government.
- **Waiver Application:** In certain cases, if there is a genuine reason for non-deduction or delay, you can apply for waiver of interest and penalty under Section 273A(2) of the Income Tax Act. This typically requires showing a reasonable cause for the delay.
- **Consultation:** Consult with a tax professional or Chartered Accountant to calculate the exact interest and penalties, assist in filing the TDS return (Form 26QB), and guide you through any waiver application process if applicable.
### Conclusion:
Timely compliance with TDS provisions is crucial to avoid interest and penalties. If TDS was not deducted as required, it's advisable to rectify the situation promptly, calculate the interest due, pay the TDS with interest, and consider applying for waiver of penalty based on genuine reasons for the delay. Professional advice will help ensure compliance and minimize financial implications.
### Penal Consequences:
1. **Interest on Late Deduction (Section 201(1A)):**
- If TDS is deducted late, interest is levied at a rate of 1% per month or part thereof, from the date on which the tax was deductible to the date of actual deduction.
- Interest is calculated on the amount of tax deductible, i.e., on ₹20,500,000 in your case.
2. **Penalty for Non-Deduction (Section 271C):**
- Section 271C of the Income Tax Act specifies a penalty equal to the amount of tax that was required to be deducted but was not deducted.
- The penalty is in addition to the interest charged under Section 201(1A).
3. **Interest on Late Payment (Section 201(1A)):**
- Apart from interest on late deduction, if the TDS amount is paid late after deduction, interest under Section 201(1A) is also applicable at 1% per month or part thereof, from the date of deduction to the date of actual payment.
### Calculation Example:
- **Interest on Late Deduction:**
- Period: May 2013 to January 2014 = 8 months
- Interest = ₹1,64,000
- **Interest on Late Payment (from 24/1/2014 to actual payment date):**
- Interest is computed similarly from the date of deduction to the date of payment.
### Remedy Available:
To address the situation:
- **Rectification and Payment:** Deduct the TDS as soon as possible and pay the deducted TDS along with interest to the government.
- **Waiver Application:** In certain cases, if there is a genuine reason for non-deduction or delay, you can apply for waiver of interest and penalty under Section 273A(2) of the Income Tax Act. This typically requires showing a reasonable cause for the delay.
- **Consultation:** Consult with a tax professional or Chartered Accountant to calculate the exact interest and penalties, assist in filing the TDS return (Form 26QB), and guide you through any waiver application process if applicable.
### Conclusion:
Timely compliance with TDS provisions is crucial to avoid interest and penalties. If TDS was not deducted as required, it's advisable to rectify the situation promptly, calculate the interest due, pay the TDS with interest, and consider applying for waiver of penalty based on genuine reasons for the delay. Professional advice will help ensure compliance and minimize financial implications.
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