penalty

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ajai kushwaha (Querist)
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03 December 2009 hi experts,

what is the rate of penalty in case of failure in deducting the tax at source on payment made to sub-contractors?
& how it is caluclated

CA Chandra Kishore Bajpai

CA Chandra Kishore Bajpai (Expert)
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03 December 2009 it may be equal to the amount of tax which has not been deducted

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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03 December 2009 - If an organisation does not deduct tax or deducts tax but does not deposit the same then interest @ 1% per month would be levied on the tax not deducted or not paid as the case may be, under section 201(1A).

- The Income Tax Department may also levy penalties to the extent of the amount of tax not deducted in cases of failure to deduct tax, under section 271C.

- If the tax is deducted but not deposited in favour of the Central Government as per the provisions of the Income-Tax Act, then the principal officer can be punished with imprisonment for a period of 3 month to 7 years with fine.

- If the returns required to be furnished under section 206 are not filed then a penalty of Rs. 100 per day may be imposed for each day of default, under section 272A. However, the assessing officer shall give an opportunity of being heard before imposing the penalty under this section.