Disallowance on non deduction of tds u/s 40a(ia)

interest will be levied for non deduction

Yes interest shall be levied

Originally posted by : CA Charmie Jhaveri
	interest will be levied for non deduction

 

CAN PENALTY BE ALSO LEVIED?

Originally posted by : Sahil Jain (DISA, CA)
	Yes interest shall be levied

 

CAN PENALTY BE ALSO LEVIED?

Let us see the impact of non-compliance of TDS provision through an instance:

If the expense of Rs 10 lakh was liable for TDS at 10%, then Rs 1lakh shall be deducted as TDS. For non-deduction/payment of Rs 1 lakh, expense of Rs 10lakhs shall be disallowed. This means that your expense increases with the same amount that in turn will raise your tax burden with Rs. 3,09,000.

Further, on non-deduction/payment of TDS, interest is levied depending on the period of delay. In addition, there is the penalty of Rs 1lakh. Above all, if the department finds non-compliance to be wilful, imprisonment is a certainty.

So, through this example, we can see that by not complying with TDS provisions, one might have to pay approximately Rs 5 lakhs and face the risk of imprisonment, instead of the required Rs 1lakh.

Mr Radhey
Only 30% of expense shall be disallowed under sec 40a(ia) and not the entire amount if TDS has not been deducted then

@ Sahil Jain Thank you for correction

Section 40(a)(ia) is amended via Finance Act, 2014 to restrict the amount of disallowance for non-deduction of tax to 30% of expenditure. The proviso is also amended to the effect that 30% of such sum shall be allowed as a deduction in computing the income of the previous year in which tax has been paid.

You are welcome