Regarding tds

This query is : Resolved

Hardik soni (Querist)
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30 December 2014 when no tds is deducted on payment and afterwards it is came to know that tds is not deducted erlier then what is the treatment of the same ? whether interest or penlty is chargeble ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 December 2014 Charging of interest u/s 201(1A) – The deductor is treated to be ‘assessee in default’ in respect of the short deduction/non deduction of tax. Under Section 201(1A) he is liable to pay simple interest @ 1% for every month or part of a month on the amount of tax in arrear from the date on which such tax was deductible to the date on which such tax is actually deducted. Further such interest shall be paid before furnishing the quarterly statement of each quarter. Charging of interest u/s 201(1A) is mandatory and there is no provision for its waiver.

Penalty u/s 221 - The assessee in default is liable to imposition of penalty where the assessing officer is satisfied that the defaulter has failed to deduct tax as required without good and sufficient reason. The quantum of penalty is not to exceed the amount of tax in arrear. Besides, a reasonable opportunity of being heard is to be given to the assessee.

Penalty u/s 271C – A penalty equivalent to the amount of tax the deductor has failed to deduct, is leviable u/s 271C. Such penalty is however only leviable by a Joint Commissioner of Income Tax.