Interest/ Penalty for delayed deduction/payment of TDS

Interest/ Penalty for delayed deduction/payment of TDS

Particulars	Rate	Period from	Period To	Section
Interest
Failure to deduct tax at source	1% pm	Date of Main payment made	Date of Deduction	201 (1A)
Failure to deposit tax at source	1.5% pm	Date of Deduction	Date of Payment	201 (1A)
Penalty
Failure to deduct in part or full	Equal to tax not deducted			271C

TDS not deducted: 1% + Penalty

TDS not deposited   : 1.5%

Delayed filling of TDS return

Existing section 272A in which a penalty of Rs.100/- per day ( subject to total amount of TDS/TCS for the period) is levied for delayed filing of TDS/TCS returns but this penalty is not mandatory  in nature if the  assesse has reasonable cause for such delay. Further this penalty is also not a prepaid penalty.

But now section 234E has been proposed to be introduced from 1^st July, 2012 in which a penalty of Rs. 200 per day (subject to total amount of TDS/TCS for the period) in case of delayed furnishing of TDS/TCS returns. The above section has been introduced to ensure timely filing of TDS /TCS returns for timely processing. It may be noted that this fee is prepaid & mandatory in nature i.e. it is to be paid before filing of delayed TDS/TCS returns.

Another new section 271H has been proposed to be introduced from 1^st July, 2012 in which a penalty ranging from Rs. 10000/- to Rs. 100000/- will be imposed for delayed & inaccurate particulars furnished in the TDS/TCS returns like incorrect PAN, amount of TDS deducted, wrong details of TDS deposited etc., hence the tax deductor must be careful now while filing the TDS/TCS returns. But in case of delayed filing of TDS/TCS returns, this provision has given one year time from the due date of filing TDS/TCS returns after depositing the TDS/TCS amount along with interest to avoid this penal provision. There is only one favourable point for the deductor in this section which is that in case he has a reasonable cause for the failure, no penalty under this section can be imposed.

Special Thanks to CA Abhishek Tonsiwal