The TDS return is to be filed by the assessee who had deducted the TDS, but there are chances that you may miss paying the TDS. Know what to do in such circumstances
- TDS rule directs the payee or employer to deduct a certain amount of tax before making full payment to the receiver
- One can also pay TDS quarterly if the Assessing Officer, with prior approval of the Joint Commissioner, permits the same.
- In case you do not deposit the TDS by the correct date – you stand to pay late fee, interest on the delay and penalties
Tax Deducted at Source or TDS has become an essential form of tax which is deducted from an individual’s income on a periodical or occasional basis. TDS can be applicable for incomes that are regular as well as irregular in nature. Income Tax Act, 1961 regulates TDS in India through Central Board of Direct taxes (CBDT) under the Indian Revenue Services (IRS). TDS rule directs the payee or employer to deduct a certain amount of tax before making full payment to the receiver. TDS is applicable for salary, commission, professional fees, interest, rent and more.
TDS Dates
All the corporate assesses and those covered under Tax Audit under section 44AB of the Income Tax Act should deposit TDS online mandatorily. Others can also deposit it with banks. One can also pay TDS quarterly if the Assessing Officer, with prior approval of the Joint Commissioner, permits the same.
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For Non-Government assessee
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Particulars
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Due Date
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Tax Deducted every month, except March
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7thof next month
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Tax Deducted in March
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30thApril
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Quarterly TDS payment schedule
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Quarter ending
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Due Date
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30thJune
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7thJuly
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30thSeptember
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7thOctober
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31stDecember
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7thJanuary
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31stMarch
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30thApril
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What if you don’t pay TDS?
In case you have not deposited TDS by the correct date, the following penalties are applicable:
- Late filing fee, which comes into play if you do not file by the deadline
- Interest, if you do not deposit the TDS amount in time
- Penalty, if the TDS is not filed within one year of the due date
Late Filing Fee
Under Section 234E, you will have to pay a fine of Rs 200 per day until your return is filed. You have to pay this for every day of delay until the fine amount is equal to the amount you are supposed to pay as TDS. For instance, say that your payable TDS amount is Rs 5,000 on 13th May and you pay it on 17th November (i.e. 189 days, counting 17th November). Then the calculation comes out to Rs 200 x 189 days = Rs 37,800, but since this is greater than Rs 5,000, you will have to pay only Rs 5,000 as the late filing fee. Added to this, you also have to pay interest which is covered in the next section.
Interest
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Section
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Nature of Default
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Interest subject to TDS/TCS amount
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Period for which interest is to be paid
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201A
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Non deduction of tax at source, either in whole or in part
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1% per month
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From the date on which tax deductable to the date on which tax is actually deducted
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After deduction of tax, non-payment of tax either in whole or in part
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1.5% per month
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From the date of deduction to the date of payment
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The above interest should be paid before filing of TDS return.
Under Section 201(1A) for late deposit of TDS after deduction, you have to pay interest, which is at the rate of 1.5% per month from the date at which TDS was deducted to the actual date of deposit. This is to be calculated on a monthly basis and not based on the number of days i.e. part of a month is considered as a full month.
For instance, if the payable TDS amount is Rs 5,000 and the date of deduction is 13th January. Say you pay TDS on 17th May. Then the interest you owe is Rs 5000 x 1.5% p.m. x 5 months = Rs 375. The month has not been defined in the Income Tax Act, 1961. However, in a number of High Court cases, it has been mentioned that it should be considered as a period of 30 days and not as an English calendar month. This amount is to be paid from the date at which TDS was deducted, not from the date from which TDS was due.
For instance let the due date of TDS payment be 7th May and you have deducted TDS on 19th April. Say you have not deposited TDS by 7th May. Then you will be required to pay interest starting from 19th April and not 7th May. Also consider the case in which you deposit tax one month after the due date. Say you have deducted TDS on 1st August. Then the due date is 7th September. Now say you deposit tax on 8th September (i.e. one day after the due date). Then interest is applicable from 1st August to 8th September i.e. for a period of 2 months. You now have to pay interest of 1.5% p.m. x 2 months = 3%.
Penalty
This equals to the amount that was failed to be deducted/collected or remitted may be imposed.
Prosecution (Sec 276B): If a person fails to pay to the credit of the Central Government, - The Tax deducted at source by him as required by or under the provisions of Chapter XVII-B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.
Penalty (Sec 234E): Deductor will be liable to pay way of fee Rs.200 per day till the failure to pay TDS continues. However penalty should not exceed the amount of TDS for which statement was required to be filed.
Penalty (Sec 271H): Assessing officer may direct a person who fails to file the statement of TDS within due date to pay penalty minimum of Rs.10,000 which may extended to Rs.1,00,000.Penalty under this section is in addition to the penalty u/s 234E.
No penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied:
- The tax deducted/collected at source is paid to the credit of the Government
- Late filing fees and interest (if any) is paid to the credit of the Government
- The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf
