Consequences of TDS defaults

Failure to deduct taxes or wrong deduction of TDS (non deposit, short deposit or late deposit):

Default/ Failure	Section	Nature of Demand	Quantum of demand or penalty
Failure to deduct tax at source	201(1)	Tax demand	Equal to tax amount deductible but not deducted
	201(1A)	Interest	@1 % p.m. of tax deductible
	271C	Penalty	Equal amount of tax deductible but not deducted
Failure to deposit tax at source	201(1)	Tax demand	Equal to tax amount not deposited
	201(1A)	Interest	@1.5% p.m. of tax not deducted
	276B	Prosecution	Rigorous imprisonment for a term for a minimum of 3 months which may extend to 7 years and with fine
Failure to apply for TAN No. u/s 203A	272BB	Penalty	Rs. 10000
Failure to furnish prescribed statements u/s 200(3)	272A(2)(k)	Penalty	Rs. 100 every day during which the failure continues subject to maximum of TDS amount
Failure to issue TDS certificate u/s 203	272(A)(g)	Penalty	Rs. 100 every day during which the failure continues subject to maximum of TDS amount.
Failure to furnish statement of perquisite or profit in lieu of salary u/s 192(2C)	272(A)(i)	Penalty	Rs. 100 every day during which the failure continues subject to maximum of TDS amount
Failure to mention PAN of the deductee in the TDS statements and certificates	272B	Penalty	Rs. 10000

 If TDS return is not filed within the specified due dates being 15th July, 2013 for the 1st quarter corresponding to FY 2013-14, the major consequences would be levy interest.

However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and HUF, only if the turnover or professional receipt exceeds sum of Rs. 1 Crore or Rs. 25 Lacs respectively in previous year, there is a requirement to deduct tax at source.

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Failure to deposit TDS on time will attract penalty

NEW DELHI: Failure to deposit timely and correct TDS or TCS will now attract a penalty ranging from Rs 200 to Rs one lakh by the Income Tax department.

All the Tax Deducted at Source (TDS) range offices of the department across the country have been asked by the Central Board of Direct Taxes (CBDT) to ensure compliance in this area and also inform and make aware the authorised deductors about this new action being initiated by the taxman.

According to the new instructions issued, a deductor, either government or private, will have to submit a "compulsory" fine of Rs 200 for delay in filing either TDS or Tax Collected at Source (TCS) every day beyond the stipulated date of remittance of these category of taxes.

Similarly, the penalty would be between Rs 10,000 to Rs one lakh for furnishing incorrect information or failure to file the collection statement within the due date.

"The assessing officer of the department will use sections 234E and 271H of the I-T Act to ensure that TDS or TCS collections are not delayed or faltered. The department, in many cases, has found that deductors delay for long the filing of these category of taxes even after deducting it from the salary of their employees," a senior official said.

The TDS regime has to be strengthend and hence such measures are important, the official said.

A big chunk of 41 per cent, in the total tax collections in the last fiscal, came from the TDS category alone.

During financial year 2012-13, Rs 2,30,188 crore tax was collected under the TDS category while the total direct taxes collections stood at 5,58,970 crore.

The department, during its recent deliberations with top I-T and CBDT officials here, has also decided to strengthen its regime for obtaining TDS from salaries of employees in order to collect more revenue under this category.

Source: Economic Times

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