Penalties for Failure to Deduct and Deposit TDS

TDS / TCS 4049 views 5 replies

Ram Avtar Singh

Nagari Sultanpur U.P.Delhi

15539 Points Posted on 13 December 2009

Penalties for Failure to Deduct and Deposit TDS

Failure to Deduct TDS
If a person fails to deduct the whole or any part of TDS as required under any of the provisions of sections 192 to 196D then:
(a) The person responsible for deduction is treated as ‘assessee in default’
(b) He shall be liable to pay by way of penalty a sum equal to the amount which he failed to deduct.
(c) He shall be liable to pay simple interest @ 12% p.a. on amount of tax liable to be deducted.
Failure to Deposit TDS
if a person after deducting TDS fails to deposit the same, then:
(a) The person repsonsible for deduction is treated as ‘assessee in default’
(b) penalty a sum equl to the amount which he failed to deposit (SEC. 271C)
(c) simple interest @ 12% p.a. till the date of actual deposit in Govt. treasury.
(d) Rigorous punishment for a term which shall not be less then three months by may extned up to seven years and fine.( sec. 276B)

Replies (5)

CA LOVELY ARORA

C.A. B.Com (H) Graduate

2151 Points Posted on 13 December 2009

but i think the interest is payable @ 1% p.m. not as 12% p.a..

e.g. TDS was to be deposited by 7th September for the month of August but he actually deposited it on 10th October to the account of central government. In this case, he would be charged interest @ 2% on the amount of TDS default.

Members, please give your comments, whether i am right or not.

Pratik Sharda

Articled Clerk

26 Points Posted on 13 December 2009

Mr Arora is right - Penalty provisions goes as below:

Sec 201, which is mandatory and states that interest @ 1% p.m. or part of the month is payable from the due date of deduction & deposit of TDS to the date of actual payment.

Sec 221 provides for a maximum penalty of the amount of TDS which is optional.

CA.P.SHEKHAR REDDY

Chartered Accountants

43 Points Posted on 13 December 2009

Yes Mr. Arora is right.

1% p.m. penalty shall be levied if assess default to deposite TDS within the sepcified time period (i.e. 7th of following month ) and

Deductor shall be treated as "Assess in default"

Vijay Jadhao

Proprietor

21 Points Posted on 17 February 2011

To All Fellows,

my ques is whether expenses is allowable in same year where asseessee subsequently make the default good(i.e. deduction of TDS on contract payments and deposititng the same along with penal interest)????