Details on TDS interest for late payment and Penalty
TDS interest - late payment and penalty
Interest Provision Under TDS
TDS interest provisions come in two types:
1.TDS interest for late deduction
The monthly interest rate for late TDS deductions is 1%. This interest rate will be charged from the time the tax became deductible until the date of deduction.The Income Tax Act’s Section 201A specifies the default of TDS interest for a late deduction. TDS return filing is only available when this interest is paid.
2.TDS interest for late payment
Section 201(1A) provides for the payment of 1.5% monthly interest on late TDS deposits after deduction. This interest is calculated monthly rather than daily.This is why even a part of a month is considered a whole month.In this case, interest is calculated from the date the TDS becomes payable, or from the date the TDS was deducted.
TDS not Deducted on Payments made to Resident
According to Section 201 of the Income Tax Act, if the person liable to deduct TDS fails to deduct TDS, whether in full or in part, when making a payment to a resident, the person liable to deduct TDS cannot be considered an assessee-in-default for non-deduction if all of the following conditions are met :
- The beneficiary is an Indian citizen.
- The beneficiary has filed his income tax return pursuant to Section 139.
- According to the beneficiary’s income tax return, he has paid all applicable taxes due.
- The resident payee has completed Form 26A and had an accountant certify it to that effect.
When all the above conditions are met, the person liable to deduct TDS will not be regarded as an assessee-in-default for non-deduction or less deduction of TDS, but he/she will be responsible for paying interest at 1% from the date the TDS was deductible until the resident recipient has filed his income tax return.
As per provisions of section 201(1A), taxpayers are required to pay interest for delay in TDS payment or for non-payment / non-deduction of TDS before filing their TDS return.
TDS DUE DATES FOR FINANCIAL YEAR 2021-2022
LAST DATE OF FILING
1st April to 30th June
31st July 2022
1st July to 30th September
31st October 2022
1st October to 31st December
31st January 2023
1st January to 31st March
31st May 2023
GOVERNMENT AND NON-GOVERNMENT DEDUCTORS TDS DUE DATES
TDS deposits for non-government deductors are due on the 7th of the following month, except in March.The due date for March is April 30th.
TDS deposits for Government deductors are due on the 7th of the next month if paid by challan.. If you pay by book entry, the TDS is deducted on the same day.
Note:- If the TDS payment due date falls on a Sunday or a public holiday, the TDS can be paid on the next working day.
Penalty provisions under TDS
The following are the TDS’s penalty provisions:
1, Penalty For Non-deduction / Non-payment Of TDS
The penalty for not deducting/paying TDS would be the amount of tax not deducted/paid as per Section 271C.
2, Penalty For Delay in TDS Return Filing
Until the problem is resolved, a fine of INR 200 per day is payable.
Late filing consequences:
Fees for the delay in furnishing the statements: (refer section 234E of Income Tax Act)
Effective from 1st July 2012, any delay in furnishing the eTDS statement will result in a mandatory fee of Rs. 200 per day until the filing of the return. The total fees should not exceed the total amount of TDS deducted for the quarter. The payment of late filing fee should be before filing such delayed eTDS statements.
For example, say TDS amount deducted is Rs 5000 for the quarter ending 30th September. Filing of return should be on or before 31st October but is filed on 24th December (i.e. 55 days, counting 31st October). Then the calculation comes out to Rs 200 x 55 days = Rs 11000, but since this is greater than Rs 5000, you will have to pay only Rs 5000 as the late filing fee.
Penalty for failure to furnish statements and furnishing incorrect statements: (refer section 271H of Income Tax Act)
Failure to file eTDS statements delaying more than a year or furnishing incorrect details in the statement filed like PAN, Challan and TDS Amount etc, will result in a penalty ranging from Rs. 10,000 to one lac as directed by the Assessing Officer. The penalty under this section is in addition to the interest u/s 234E.
No penalty under section 271H levied in case of delay in filing the TDS/TCS return if following conditions satisfies:
- The tax deducted at source is paid to the credit of the Government.
- Also, late filing fees and interest (if any) is paid to the credit of the Government.
- Filing of TDS return should be before the expiry of a period of one year from the due date specified in this behalf.
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