Consequence of failure to deduct taxes

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Sumeet Agarwal (Querist)
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17 January 2012 As per Section 201, if the person fails to deduct tax at source, he shall be liable to pay simple interest
a)at 1% or every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted
b)at 1.5% for every month or part of the month on the amount of such tax from the date on which such tax was deduced to the date on which such tax is actually paid.
Further, As per Section 271C, if person fails to deduct TDS he shall be liable to pay by way of penalty a sum equal to amount of TDS.
My question is whether both the provision can be applied together and if yes, total amount can exceed the amount of total tds dedutable and payable to the account of central govt.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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17 January 2012 Both the sections will not apply simultaneously. If one is true other is false. 271C penalty is applicable when a person fails to deduct TDS.
.
Interest is charged when there is a delay in deduction or/and delay in depositing the same. Here the assessee does not fail to pay.
.

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