Quick Summary
Consequence for failure to deduct/collect or payment of tax - Computation of interest 1. Section 201 of the of the Act deals with the consequences of persons who fail to deduct tax or after deducting, fail to deposit the same to the credit of the Central Government. Sub-section (1A) of the said section provides that if any person who is liable to deduct tax at source does not deduct it or after so deducting fails to pay the same to the credit of the Central Government, then he shall be liable
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FAQ :
If you fail to deduct tax at source or, after deducting it, fail to pay it to the Central Government, you will be liable to pay simple interest on the amount.
From 1st April 2022, amendments clarify that if an order is made by the Assessing Officer for a default in deducting tax at source, the interest will be paid according to that order.
From 1st April 2022, if an order is made by the Assessing Officer for a default in collecting tax at source or paying it, the interest will be paid as per the Assessing Officer's order.
These amendments will take effect from 1st April 2022.
The amendments aim to make the legislation clearer, free it from misinterpretation, and reduce frequent litigation concerning the computation of interest for tax deduction or payment failures.
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