Less deduction of TDS

This query is : Resolved

Garima (Querist)
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05 July 2009 During audit of a PSU i found on certain expense (payment exceeding Rs 1 crore), TDs has been deducted @ 2.6%. Surcharge though applicable but was not deducted. Tell me consequences as the last date for deposit of TDS for FY 2009-10 i.e 31st May, 2009 has been passed.

Jitender

Jitender (Expert)
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05 July 2009 proportionate exp will be disallowed u/s 40.
for the month of march, u can deposit it upo 30th sep to allow it.

Ratan Sharma

Ratan Sharma (Expert)
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06 July 2009 Hi,
As per section 40(ia) , tax has to be deducted as per the prescribed . If the tax is not deducted at prescribed rate or deducted at low rates then whole of the expenses will be disallowed. In my opinion there is no provision for proportionate allowance of expenses.
In your case, as the surcharge is not deducted whole expenses will be dissallowed.
Experts plz clarify if any other consequences are there.

CA Bosu babu

CA Bosu babu (Expert)
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07 July 2009 only proportionate expenditure will be disallowed.

you can take as only for such amount has been deducted fully n for others not deducted. and so proportionate wil only be disallowed

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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07 July 2009 Expense is disallowed only if
1) Tax is not deducted
2) Tax is deducted but not paid to CG treasury.

So, there will not be any disallowance.

But penal provision for non-compliance of TDS procedures can be attracted.