e-TDs:- Heavy Late Fee and Penalty in TDS (Tax Deduction at Source)

Late Fee:- Presently, if TDS Return is submitted late, penalty is charged @ 100/- per day  as per section 272A. Penalty amount is limited to maximum of TDS amount.  Practically, this penalty is not imposed in any case due to lengthy procedure to charge penalty.  According to new rules applicable w.e.f. 01-07-2012 or after  TDS/TCS  section 272A has been changed with new Section 234E which is hard in comparison with old.

             In simple words, penalty will be charged @ 200/- per day on late submission of TDS/TCS return.  Penalty amount will not be increased the TDS/TCS amount.  Penalty amount will be deposited prior submission of TDS/TCS return.  This penalty will be start w.e.f. 2nd Quarter of the Financial Year 2012-13.

              A new penalty under section 274H will also be charged except above new penalty.  Minimum amount of this penalty will be Rs. 10,000 and Maximum amount of the penalty will be Rs. 1,00,000/-  This penalty will be imposed under two circumstances :-

1. In case, incorrect information is submitted in TDS/TCS return. 
2. In case, TDS/TCS return is submitted after one year, means deductor do not deposit TDS/TCS/RETURN/INTEREST with in one year after deducting TDS/TCS from deductor or collector. 

Note :-  Section 273B has been amended to relax in New Penalty, but there is no provision in relaxation of Late Fee.  It means Late Fee amount will be paid as mandatory. 

New Section 234E 

234E.   (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues. 

       (2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible
or collectible, as the case may be.

          (3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.

       (4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.”.

                                                         Section 2734B

100. In section 273B of the Income-tax Act, after the word, figures and letter “section 271G,”, the
word, figures and letter “section 271H,” shall be inserted with effect from the 1st day of July, 2012

Key Dates for TDS/TCS

Key Dates for TDS/TCS

• Payment of TDS/TCS (Tax Deduction at source/Tax Collection at source) upto 7th of next following month from the last date of month in which TDS/TCS was deducted/collected. 

• Submission of e-tds/e-tcs Return with in 15th day from the end of each quarter in which TDS/TCS was deducted/collected.
• Issuance of Form 16A certificate with in 15 days from the date of submission of e-tds/e-tds statement.

New TDS Rates

Pay TDS/TCS in Time to avoid Interest on late Deposit of TDS/TCS

Payment of Interest on Late Deduction of TDS or Late Deposit of TDS [Section 201 (1A) and (2)]

Besides the above penalty, if any such person, principal officer or company does not deductor whole or part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest as under :-

Period of Defaults		Rate of Interest
(a)	From the date the tax was deductible to the date on which such tax id deducted	1% p.m. or part of the month
(b)	From the date on which such tax is deducted to the date on which such tax is actually paid	1.5% p.m. or part of the month

Example

S.No.	Nature of Exp.	Date of Payment/ Credit	Date of Deduction of Tax	Date of Deposit of Tax	Rate of Interest	Period for which it’s payable
1	Payment to Contractor	16-08-2010	31-03-2011	31-07-2011	1% 1.5%	From 16-08-10 to 31-03-11 i.e. for 8 months From 01-04-11 to 31.07.11 i.e. for 4months
2	Payment to Contractor	16-08-2010	16-08-2010	31-07-2011	1.5%	From 16.08.10 to 31.07.11 i.e. for 12 months
3	Payment to Contractor	16-08-2010	30-04-2011	30-09-2011	1% 1.5%	From 16.08.10 to 30.04.11 i.e. 9 months From 01.05.11 to 30.09.11 i.e. 5 months
4	Rent	31-03-2011	31-03-2011	30-04-2011	No Interest payable as tax has been within the due date.

  

            Further the amount of tax deducted together with interest for delayed payment shall be a charge upon all the assets or the person or the company as the as may be. 

            Where the assessee failed to deduct tax under section 194C, but it was found that the contractor had paid the advance tax and self-assessment tax over and above the tax payable, thereby not causing any loss to the revenue,  if the revenue is permitted to levy interest under section 201(1A) even in a case where the person liable to tax has paid tax on due date, the revenue would derive undue benefit by getting interest on the amount of tax which had already been paid on the due date.  Such a position cannot be permitted. 

          Interest leviable even if tax has been paid by the deductee;  Where the tax has been paid by the deductee-assessee, tax can not be incomes from the deductor,  but interest under section 201(1A) shall be payable by the deductor till the date of payment of tax by the deductee-assessee.

Interest Rate on Late Deposit of TDS

Friends,  As a deductor it is mandatory duty to deposit TDS/TCS in time. In case any TDS/TCS amount  is  not deposited in due time.   It attracts interest on late deposit of TDS/TCS (Tax deduction at source/ Tax collected at source).  Before 30/06/2010, interest rate on late deposit of TDS/TCS  was only 1% p.m. for each month  or any part thereof.  But now Interest rate has been increased after 30/06/2010 from 1% to 1 and half (1.50%) p.m for each month or any part thereof.

Therefore all deductors are requrested to deposit TDS/TCS in due time.   If any deductor deposit TDS only after 1 day from due date.  It does not mean that only one day itnerest will be charged.   Income Tax Department will charge interest for a month instead of a day.

(Overall Interest rate is 18% instead of 12% p.a. w.e.f. 01.07.2010)

One more thing is that interest amount should be deposited before submitting e-tds/e-tcs return/statement.

New TDS Rate with Excel TDS Calculator (Click here)