Lower deduction of tds
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 July 2013
Dear Sir
We have taken office & Furniture on rent & deducted tds on furniture @ 2 % for F.Y.2011-12 & 2012-13 & deposited the tds & return after seeing rate from simple tax web site but now I have seen in Ready recknor that it is 10 % on furniture & fixure.
is there any solution for the same ?
Ito can raise the demand if landlord's tax liabilty is nill ?
We have taken office & Furniture on rent & deducted tds on furniture @ 2 % for F.Y.2011-12 & 2012-13 & deposited the tds & return after seeing rate from simple tax web site but now I have seen in Ready recknor that it is 10 % on furniture & fixure.
is there any solution for the same ?
Ito can raise the demand if landlord's tax liabilty is nill ?
09 July 2013
Yes demand can be raised. You will have to pay the remaining amount of TDS along with interest and revise your TDS return.
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 July 2013
as per notification no.37/2012 specified that assessee in not in default if it will be certfied by the ca as there is no tax liability of deductee.but this notication dt is 01.07.2012 whereas our liability is from 01.05.11.what is your suggestion in this matter?
03 August 2024
When you find that TDS has been deducted at a lower rate than prescribed by the Income Tax Act, as in your case where TDS was deducted at 2% instead of the required 10% for furniture and fixtures, here’s what you need to do and consider:
### Rectifying Lower TDS Deduction
1. **Correct the TDS Deduction:**
- **Revised Deduction:** Ideally, TDS should have been deducted at the correct rate of 10%. Since you have deducted at 2%, you need to rectify this. This involves:
- **Filing Revised TDS Returns:** You will need to file revised TDS returns for the financial years 2011-12 and 2012-13 to reflect the correct TDS rate.
- **Paying the Shortfall:** Pay the shortfall of TDS to the government. This is the difference between what was deducted (at 2%) and what should have been deducted (at 10%).
2. **Addressing the Shortfall:**
- **Interest and Penalty:** Be prepared to pay interest on the shortfall amount. Interest is charged under Section 201(1A) of the Income Tax Act for the period of default.
- **Tax Demand:** The Income Tax Department may raise a demand for the shortfall along with interest. Ensure that you settle this to avoid further issues.
3. **Landlord's Tax Liability:**
- **Notification Impact:** Notification No. 37/2012 provides relief to the deductor if a certificate from a CA confirms that there is no tax liability of the deductee. However, since your liability is from FY 2011-12 and the notification is dated 01.07.2012, it may not apply retroactively.
- **Certification:** If you obtain such a certificate, it may help in mitigating the demand or penalty, but it does not absolve you of the primary obligation to deduct and deposit TDS at the correct rate.
4. **Legal and Practical Advice:**
- **Consult a Tax Professional:** Given the complexity and the potential for interest and penalties, consult with a tax professional or CA to guide you through the process of rectifying the TDS returns and managing any resultant tax demands.
- **Document Everything:** Keep detailed records of all communications, revised returns, and payments made to the government for future reference and compliance.
### Summary of Steps
1. **File Revised TDS Returns**: Reflect the correct TDS rate of 10%.
2. **Pay Shortfall and Interest**: Deposit the shortfall amount and interest on the underpaid TDS.
3. **Obtain a CA Certificate**: This may help in mitigating issues with the demand, but it is not a substitute for correcting the TDS rate.
4. **Consult a Tax Expert**: For comprehensive guidance and compliance.
Taking corrective action promptly and following the proper procedures will help in managing any repercussions and ensuring compliance with the Income Tax Act.
### Rectifying Lower TDS Deduction
1. **Correct the TDS Deduction:**
- **Revised Deduction:** Ideally, TDS should have been deducted at the correct rate of 10%. Since you have deducted at 2%, you need to rectify this. This involves:
- **Filing Revised TDS Returns:** You will need to file revised TDS returns for the financial years 2011-12 and 2012-13 to reflect the correct TDS rate.
- **Paying the Shortfall:** Pay the shortfall of TDS to the government. This is the difference between what was deducted (at 2%) and what should have been deducted (at 10%).
2. **Addressing the Shortfall:**
- **Interest and Penalty:** Be prepared to pay interest on the shortfall amount. Interest is charged under Section 201(1A) of the Income Tax Act for the period of default.
- **Tax Demand:** The Income Tax Department may raise a demand for the shortfall along with interest. Ensure that you settle this to avoid further issues.
3. **Landlord's Tax Liability:**
- **Notification Impact:** Notification No. 37/2012 provides relief to the deductor if a certificate from a CA confirms that there is no tax liability of the deductee. However, since your liability is from FY 2011-12 and the notification is dated 01.07.2012, it may not apply retroactively.
- **Certification:** If you obtain such a certificate, it may help in mitigating the demand or penalty, but it does not absolve you of the primary obligation to deduct and deposit TDS at the correct rate.
4. **Legal and Practical Advice:**
- **Consult a Tax Professional:** Given the complexity and the potential for interest and penalties, consult with a tax professional or CA to guide you through the process of rectifying the TDS returns and managing any resultant tax demands.
- **Document Everything:** Keep detailed records of all communications, revised returns, and payments made to the government for future reference and compliance.
### Summary of Steps
1. **File Revised TDS Returns**: Reflect the correct TDS rate of 10%.
2. **Pay Shortfall and Interest**: Deposit the shortfall amount and interest on the underpaid TDS.
3. **Obtain a CA Certificate**: This may help in mitigating issues with the demand, but it is not a substitute for correcting the TDS rate.
4. **Consult a Tax Expert**: For comprehensive guidance and compliance.
Taking corrective action promptly and following the proper procedures will help in managing any repercussions and ensuring compliance with the Income Tax Act.
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