Details on TDS Penalty and Interest for Late Payment

Last Updated at: January 14, 2020
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TDS Penalty
Details on TDS Penalty and Interest for Late Payment

Tax Deducted at Source, commonly known as TDS was introduced with the objective of collecting tax from the very source of income. According to the concept of TDS, the deductor, understood as the person who is liable to make a payment of a particular nature to someone else, known as a deductee, has to deduct the tax at source and remit this amount in the account of the Central Government.

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

TDS INTEREST FOR LATE PAYMENT

There are two types of TDS interest provisions:

  1. TDS Interest for late deduction:
    The rate of interest for late deduction of TDS is 1% per month. This interest rate shall be levied 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. only after the paying of interest, the TDS return filing is possible.
  2. TDS Interest for late payment:
    The interest payment for late deposit of TDS after deduction is at the rate of 1.5% per month under Section 201(1A). This interest is calculated on a monthly basis and not on the number of days. And this is why part of a month is considered as a full month. The payment of this interest amount is calculated to the date on which TDS is due i.e. from the date on which the TDS was deducted.

There is a provision to pay 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.

E-file Your Income Tax Returns

TDS NOT DEDUCTED FOR PAYMENT MADE TO RESIDENT

As provided under Section 201 of the Finance Act, the payer who does not deduct the whole or in part of the tax on the payment forwarded to the resident payee is not considered to be an assessee-in-default for the tax which he has not deducted, if the below-lying conditions are satisfied:

  • The resident recipient has provided his return for his income under section 139.
  • The above income has been taken into account by the recipient of the resident in its return of income.
  • The taxes due on the income have been paid by the resident recipient on the income declared 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 the Form no. 26A

TDS DUE DATES FOR FINANCIAL YEAR 2019-20

QUARTER PERIOD LAST DATE OF FILING
1st Quarter 1st April to 30th June 31st July 2019
2nd Quarter 1st July to 30th September 31st October 2019
3rd Quarter 1st October to 31st December 31st January 2020
4th Quarter 1st January to 31st March 31st May 2020

 

TDS Payment due date for Government and Non-Government

  • The due date for deposit of TDS for Non-Government deductors:

It is 7th of the next month, except for the month of March. For March, the due date is 30th April.

  • The due date for deposit of TDS for Government deductors:

7th of the next month if paid through Challan. And the same day on which the TDS is deducted if paid through book entry.

TDS PAYMENT DUE DATE FOR PUBLIC HOLIDAYS AND SUNDAYS

If the TDS payment due date falls on Sunday or a public holiday, the TDS can be paid 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 deducted or remitted can be imposed on the payer. The payer is punishable with rigorous imprisonment for a term not less than three months and extending up to seven years. Also, in addition with a fine in case, the payer doesn’t pay the tax deducted to the account of the Central Government. This can be taken under the provisions of Chapter XVII-B of the Section 276B.

Click the link to operate the TDS penalty calculator on the Income Tax Dept. official website.

CONSEQUENCES OF LATE FILING

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

Details on TDS Penalty and Interest for Late Payment

12983

Tax Deducted at Source, commonly known as TDS was introduced with the objective of collecting tax from the very source of income. According to the concept of TDS, the deductor, understood as the person who is liable to make a payment of a particular nature to someone else, known as a deductee, has to deduct the tax at source and remit this amount in the account of the Central Government.

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

TDS INTEREST FOR LATE PAYMENT

There are two types of TDS interest provisions:

  1. TDS Interest for late deduction:
    The rate of interest for late deduction of TDS is 1% per month. This interest rate shall be levied 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. only after the paying of interest, the TDS return filing is possible.
  2. TDS Interest for late payment:
    The interest payment for late deposit of TDS after deduction is at the rate of 1.5% per month under Section 201(1A). This interest is calculated on a monthly basis and not on the number of days. And this is why part of a month is considered as a full month. The payment of this interest amount is calculated to the date on which TDS is due i.e. from the date on which the TDS was deducted.

There is a provision to pay 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.

E-file Your Income Tax Returns

TDS NOT DEDUCTED FOR PAYMENT MADE TO RESIDENT

As provided under Section 201 of the Finance Act, the payer who does not deduct the whole or in part of the tax on the payment forwarded to the resident payee is not considered to be an assessee-in-default for the tax which he has not deducted, if the below-lying conditions are satisfied:

  • The resident recipient has provided his return for his income under section 139.
  • The above income has been taken into account by the recipient of the resident in its return of income.
  • The taxes due on the income have been paid by the resident recipient on the income declared 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 the Form no. 26A

TDS DUE DATES FOR FINANCIAL YEAR 2019-20

QUARTER PERIOD LAST DATE OF FILING
1st Quarter 1st April to 30th June 31st July 2019
2nd Quarter 1st July to 30th September 31st October 2019
3rd Quarter 1st October to 31st December 31st January 2020
4th Quarter 1st January to 31st March 31st May 2020

 

TDS Payment due date for Government and Non-Government

  • The due date for deposit of TDS for Non-Government deductors:

It is 7th of the next month, except for the month of March. For March, the due date is 30th April.

  • The due date for deposit of TDS for Government deductors:

7th of the next month if paid through Challan. And the same day on which the TDS is deducted if paid through book entry.

TDS PAYMENT DUE DATE FOR PUBLIC HOLIDAYS AND SUNDAYS

If the TDS payment due date falls on Sunday or a public holiday, the TDS can be paid 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 deducted or remitted can be imposed on the payer. The payer is punishable with rigorous imprisonment for a term not less than three months and extending up to seven years. Also, in addition with a fine in case, the payer doesn’t pay the tax deducted to the account of the Central Government. This can be taken under the provisions of Chapter XVII-B of the Section 276B.

Click the link to operate the TDS penalty calculator on the Income Tax Dept. official website.

CONSEQUENCES OF LATE FILING

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

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