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Tds non deduction

08 October 2013

Kindly help me out..

A person is having salary Rs.235000 yearly in 2012-13.

While paying salary, the person said not to deduct TDS as he is having savings more than 35000. Later on it get to know that the person is not having even PAN number..

What to do now.? My friend needs suggestion. Can he deduct TDS now for the year 2012-13 with any penality or can't do anything now...??

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8 Replies

NAMAN SINGHAL (CA final , CS final) (228 Points)
Replied 09 October 2013

Firstly if a person doesn't submit pan then tds shall be deducted @ 20 %. Secondly late deduction or non deduction would attract penalty @ 18% p.a. Thirdly late filing of tds return will also attract penalty of rs 200 per day but subject to max amount of tds.( refer section 234E) In my opinion ask the person to apply for pan ( hardly it will take a week to generate pan). Deduct and deposit tds of previous year on current date along with interest and penalty to avoid further mandatory penalty of rs 100000 in case details are not furnished upto one year from the date when it is required to be submitted.

Nikhil Kaushik (Fellow CA) (84899 Points)
Replied 09 October 2013

As per CBDT circular No 8 dated 5 October 2012, in case where the salary less 80C deductions is less than the basic exemption limit, no TDS is deductible even if PAN is not available.

206AA operates only where tax is deductible in the first place. Section 192 doesn't provide for a TDS rate. Therefore, where no tax is deductible, 206AA won't operate.

Therefore, in your case, nothing is required to be done. 206AA won't apply.

NAMAN SINGHAL (CA final , CS final) (228 Points)
Replied 09 October 2013

Dear nikhil I think when investment details are not supplied by employee then the tds is deducted at the end of the year. Further the employee is not holding pan. In these circumstances the given income is above exemption limit. If I am wrong please correct me

Nikhil Kaushik (Fellow CA) (84899 Points)
Replied 09 October 2013

Naman Bhai,

In case investment details are not available, then if total income is more than 2,00,000, then 20% is to be deducted on the whole of the salary ie if you earn Rs 2.40 lakhs and no investment details are provided, then Rs 48,000 shall be deducted.

NAMAN SINGHAL (CA final , CS final) (228 Points)
Replied 09 October 2013

very TRUE, Now the deducted amount is to be deposited with interest. Practicaly this problem can be resolved by claiming some deductions

Deepak Manchanda (Student) (35 Points)
Replied 17 October 2013

As salary of the person is 2,40,000. 1% interest p.m. for the late deduction will be charged on 2,40,000 or 40,000 or 4000 or 4120... for the financial year 2012-13??

Nikhil Kaushik (Fellow CA) (84899 Points)
Replied 17 October 2013

the interest for late deduction is charged on monthly basis:

if the monthly salary is Rs 20,000, then TDS to be deducted is Rs 4,000 pm and interest chargeable thereon.

Deepak Manchanda (Student) (35 Points)
Replied 17 October 2013

As posted by Mr. Naman Singla to ask the person to apply for pan ( hardly it will take a week to generate pan). Deduct and deposit TDS of previous year on current date along with interest and penalty. In that case if noe the person shows his PAN Card and at that time how much TDS to be deducted if lets say the person is having salary of Rs.2,40,000 in financial year 2012-13 ?

Nd Nikhil bro as per your advise lets say if a person is 15000 pm salary and suddenly between the financial year his salary got increased i.e Rs.2,40,000 yearly and the salaried person give acknowledgement that he is having tax saving investment and ask not to deduct TDS as his salary is below the exemption limit i.e. 2,00,000+1,00,000 (under 80C) and he is having savings. He gives written acknowledgment but doesn't show any saving and office also doesn't ask to him as he gived a written acknowledgement. Then what will be result under these circumstances?

ask the person to apply for pan ( hardly it will take a week to generate pan). Deduct and deposit tds of previous year on current date along with interest and penalty

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