Details On TDS Penalty And Interest For Late Payment

The TDS (Tax Deducted at Source) penalty for late filing of TDS Return is a fine of Rs. 200 per day under Section 234E. Tax Deducted at Source also known as TDS was introduced with the aim of collecting tax from the very source of income. According to the concept of tax deducted at source, the deductor is the person who responsible for making a payment of a specific nature to someone else, called deductee, has to deduct the tax at source and remit the concerned mount in the account of the Central Government.

The credit of the particular deducted amount will be calculated on the basis of Form 26AS or TDS certificate issued by the deductor. And this amount will be given to the deductee, from whose income tax has been deducted at source. The concerning provision of the Act or the First Schedule to the Finance Act mentioned the rates that are specified for the tax deduction. The tax rates that are specified under the Double Taxation Avoidance Agreements shall also be considered in the case of non-resident persons.

TDS Penalty and late payment

There are basically two kinds TDS penalty and late payment:

• TDS Interest for Late Deduction: The rate of interest per month for late deduction is 1%. This interest rate shall be imposed from the date on which the tax was deductible to the date of deduction. The Section for default for TDS Interest for late deduction is 201A, once you pay the interest, the TDS return filing will be possible.
• TDS Interest for Late Payment: The interest payment for the late deposit of TDS once the amount is deducted will be at the rate of 1.5% per month according to Section 201(1A). This interest will be calculated on a monthly basis and not on the basis of the number of days. And that is the reason why part of the month is considered as a full month. The calculation of the payment of this interest amount is done to the date on which TDS is due i.e., from the date on which the TDS was deducted.

Prosecution (Sec 276B): In case a person fails to pay to the credit of the Central Government-

The Tax that is deducted at source by him as needed by or under the provisions of Chapter XVII-B, he shall be punishable with rigorous imprisonment for a team which shall not be less than 3 months but which might extend 7 years and with fine.

There is also a provision for paying the interest on late TDS before paying TDS return or after the demand for the same has been raised by TRACES. There is also a provision to adjust such an interest from the amount remaining in any TDS Challan under any section. This interest paid on delay in deposit of TDS is not considered as an expenditure under the Income Tax Act.

TDS Not Deducted For Payment That Is Made To Resident

According to Section 201 of the Finance Act, the payer who does not deduct any part of the tax on the payment forwarded to the resident payee is not considered to be an assesses-in-default for the tax which he has not deducted, in case the below-mentioned conditions are satisfied:

• The resident recipient has given his return for his income under Section 139.
• The income mentioned above has been taken into account by the recipient of the resident in its return of income.
• The pending taxes on the income have been paid by the resident recipient on the income announced in such return of income.
• A certificate to this effect has been furnished by the payee of the resident to this effect from an account in Form no. 26A.

TDS Payment Due Dates For Public Holidays And Sundays

In case the TDS payment due date falls on a public holiday or a Sunday, the TDS payment can be made on the next working day.

Penalty Levied For Short or Late Payment of TDS

The penalty to the extent of an amount that was not remitted or deducted can be levied on the payer. The payer is punishable with considerable imprisonment for a period not less than three months and extending up to 7 years. Also with a fine in the case, the payer does not pay the tax deducted to the account of the Central Government. This can be covered under the provisions of Chapter XVII-B of Section 276B.

Consequences In Case of Late Filing

1st July 2012 onwards, a delay in offering the eTDS statement will end in a mandatory fee of Rs. 200 days till the return is filed. But in this case, the total fee does not exceed the total TDS deducted amount for the given quarter. The late filing fee has to be paid before such an eTDS statement is filed. In case there is a failure of delaying the filing of the e-TDS statement exceeding one year, or in case the details like PAN verification, Challan, and TDS statement, furnished in the statement are incorrect, there is a penalty ranging from Rs. 10,000 to 1 lakh, as decided by the Assessing Officer.

1. Late Filing Fee (Sec 234E): Deductor will be liable to pay the way of fee of Rs.200 per day till the failure to pay TDS continues. But, the penalty must not exceed the amount of TDS for which the statement was needed to be filed.
2. Penalty (Sec 271H): Assessing officer might direct a person who fails to file a statement within the due date to pay a penalty minimum of Rs.10,000 which might be extended to Rs.1,00,000.

Due Dates of Financial Year 2020-21 for Return Filing

1st quarter: 1st April to 30th June; Last date of filing – 31st March 2021

2nd quarter: 1st July to 30th September; Last date of filing – 31st March 2021

3rd quarter: 1st October to 31st December; Last date of filing – 31st January 2021

4th quarter: 1st January to 31st March; Last date of filing – 31st May 2021

TDS & Payment Deposit Due Dates for Government & Non-Government

• The due date for depositing TDS – 7th of next month
• Due dates for depositing TDS are as follows:

For non-government deductors – 7th of next month (except for March where the due date is 30th of April)

For Government deductors – 

1. In case paid via challan – 7th of next month
2. In case paid via book-entry – same day i.e., the day on which TDS deducted.

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