09 March 2014
Dear Experts, My client (Firm) has not deducted TDS from Transporters payments of Rs. 560000/= during the year and has made full payments as and when bills received. Now the transporter says he is not willing to pay. My query is if the assessee pays the TDS amount from his own pocket- Will it be allowed as a deductible expenditure? If the amount is paid on 31.03.2014, will he be filing TDS quarterly return for Q4 only? Will penalty be levied U/S 234 E. Whether interest amount on TDS has to be paid along with TDS payment with calculations for each transaction? Awaiting your guidance......
09 March 2014
if transporter has given you PAN details, then there is no need to deduct TDS anyways.
if the PAN is not available, you may pay tax on your own, reflect the same in TDS returns. expense shall be allowed in such a case. Yes only q4 should be affected provided the payment was not due earlier. (please remember that if the payment is credited to the contractor accounts in your books at an earlier date, tds becomes deductible on that date). where entries are deliberately passed on a later date, that can attract interest too.
with regards to 234E, if the original return was filed before the due date, revising the doesnt attract 234E.
it is advisable to pay any interest at the earliest.
10 March 2014
Dear Mr. NIKHIL, Thanks. The transporter has provided PAN details. Now while filing 26 Q there is a option of Reasons for Non deduction/Lower deduction and Options given for tagging are A B C Y or Z. Which one will be applicable in my case. Thanks
27 July 2025
Here’s what you can do regarding the **non-deduction of TDS on transporter payments despite PAN availability** and the filing of TDS returns:
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### 1. **Is TDS deduction required if transporter has PAN?**
Yes, if the transporter has provided a valid PAN, TDS **must be deducted** on payments exceeding the threshold (under **Section 194C** for transporters). If it was not deducted, it is a default.
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### 2. **Can you pay TDS from your own pocket?**
No, if PAN is available, you **cannot pay TDS from your own pocket**. The obligation to deduct and deposit TDS lies with the deductor (your client). The transporter cannot be asked to pay the TDS later. Your client should have deducted TDS at the time of payment or credit.
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### 3. **How to report in TDS return (Form 26Q) if TDS was not deducted?**
In the TDS return, you must show the payments made but no TDS deducted. Since PAN is available, **non-deduction is a default**, and you cannot select ‘Reason for non-deduction’ as ‘T’ or similar.
**If no option fits in RPU:**
* File the return reporting the payments and zero TDS deducted. * This will attract interest and penalty.
* Interest under **Section 201(1A)** is payable on the amount of TDS not deducted or deposited (calculated from due date of deduction to actual payment date). * Penalty under **Section 271C** for failure to deduct TDS may also be levied. * **Section 234E** penalty is Rs. 200 per day for late filing of TDS returns; if the original return was filed on time but revised late, 234E may not apply.
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### 5. **If payment is made now (31.03.2014) without deducting TDS earlier:**
* You should deposit TDS ASAP with interest (calculate interest on each delayed payment). * File the **TDS return for Q4**, including all such payments and TDS deposited. * Interest needs to be calculated separately for each payment from the due date to the actual deposit date.
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### Summary for your case:
| Aspect | Advice | | -------------------------- | ---------------------------------------------------------------------------------- | | PAN available? | Yes, TDS must be deducted | | Non-deduction consequences | Pay TDS now + interest + possible penalty | | TDS paid by deductor? | Must be deducted and paid by deductor, cannot pay from own pocket if PAN available | | Return filing | File Q4 return including all payments and TDS paid now | | Penalty under 234E? | If original returns were timely, revised filing may not attract 234E |
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If your client insists no TDS deduction was made, you can advise them to voluntarily pay the TDS with interest and file the returns correctly to minimize penalties.
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If you want, I can help you draft an email or note explaining this clearly for your client or the department. Would that help?
CAclubindia
