Non resident tds

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Shree (Querist)

28 October 2014 Hi,if a person collects tds from a payment to non resident in the month of Feb and not deposit it until March 31st, will that expense be disallowed permanently or can it be allowed as deduction in the year of payment? please clarify if the treatment is same here, as in case of a resident payee in whose case expense is allowed in the year of payment of TDS..thanks in advance

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

28 October 2014 As with other TDS defaults the consequences for Non deduction may be broadly classified as follows

a) Disallowances of the amounts paid under Section 40 (a) (i). It should be noted that the scope of the section dealing with payments to non residents is wider than that of 40 (a) (ia) which deals with residents. However there is no disallowance of any salary due to non deduction if the employee concerned pays the tax., but interest on the delayed period may be chargeable

b) Simple Interest at 12 % p a u/s 201A (which is on a month to month basis after the Finance Act 2007)

c) Penalties for non deduction (u/s 271C) and failure to pay the deducted tax to the government (u/s 221)

d)Prosecution u/s 276B

Section 195 A provides for the grossing up of payments in case of Net Of Tax Payments.

Shree

Shree (Querist)

28 October 2014 Sir thanks for the answer. But I would like to be more specific with my question.I want to know what is the due date for payment of tax deducted in case of non resident payee to make it an allowable deduction. Is it due date u/s 139(1) or due date as per TDS provision(7 th of next month)?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 October 2014 Due date is 7th of next month without interest. For allowable deduction it is due date u/s 139(1) with interest payment.

Shree

Shree (Querist)

29 October 2014 Okay Sir.Thanks a lot

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