TDS (Tax Deducted at Source)
TDS is tax deducted at source. As we know, Total income of an assessee for the previous year is taxable in relevant assessment year. But most of the time, Income tax is recovered from the assessee in the previous year itself by using different provisions related to advance tax, TDS etc. In this post we are going to know TDS payment options, TDS due dates, provision related to TDS return and Interest, penalties, late fee etc.
In this post we will get to know about evrything about TDS and different provisions related to TDS.
1) What is TDS?
TDS is tax deducted at source. TDS at the rate prescribed should be deducted at the time of payment and it must be deposit to the credit of Central government within prescribed time.
2) When to deduct TDS:
In case of salary and Life Insurance Premium:- At the time of payment
In Other cases: At the time of payment or at the time of credit to the account of the payee, whichever is earlier.
3) Time and Mode of TDS payment:
The person who in bound for deducting TDS should deposit the deducted TDS to the Central Government within prescribed time.
Time Limits :
1) If deductor is an office of the Government :
a) On the same day where tax is paid without production of an income-tax challan.
b) On or before 7 days from the end of the month in which the deduction is made where tax is paid accompanied by an income-tax challan or income-tax is due under Section 192(1A).
2) In case of other deductor
a) On or before 30th day of April where the amount is credited or paid in the month of March. Example – If Salary is paid on 7th March and TDS is deducted,then deducted TDS should be deposited on or before 30th april.
b) On or before 7 days from the end of the month in which the deduction is made or income-tax is due under sub-section (1A) of Section 192. Example – If Salary is paid on 10th December and TDS is deducted,then deducted TDS should be deposited on or before 7th January.
Note : Any sum deducted under section 194-IA (Transfer of immovable property) shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB.
4) Mode of payment of TDS:
TDS must be deposited to the credit of the Central Government in following modes:
a) TDS E-Payment is mandatory for and all assesses(other than a company) to whom provisions of section 44AB(Tax Audit) are applicable. OR
b) Challan No. 281 in the authorized bank branch.
5) Consequences and Disadvantage if fails to deduct or pay TDS within time:
A person (principal officer of company, employer etc.) shall be deemed to be an assessee in default if they do not deduct the whole or part of tax of after deducting fail to pay tax to government.
1) Simple Interest u/s 201(1) and u/s 201(1A) : Assesse in default will be liable to pay Interest @1% of deducted tax amount for every month or part of month from the due date to the actual date of tax deducted u/s 201(1) and interest @1½% of deducted tax amount for every month or part of month from the date on which tax was deducted to thel date of payment of deducted tax u/s 201(1A).
2) Penalty u/s 271C: Penalty of an amount equal to tax not deducted could be imposed under section 271C. the total amount of penalty shall not exceed the amount of tax in arrears.
3) Disadvantage :
Disallowance of expenditure: As per section 40(a)(i) of the Income-tax Act, any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.
Same way, as per section 40(a)(ia), any sum payable to a resident, which is subject to deduction of tax at source, would attract 30% disallowance if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.
6) Time limit for issue of TDS Certificate (Form no.16 or 16A)
Form No. 16 (Salary u/s 192) :
by 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted.
Form No. 16A (other cases)
within 15 days from the due date for filling the Statement of TDS.
Note: The deductor may issue duplicate TDS certificate if the deductee has lost the original certificate.
7) Forms for filling Quarterly Statement for Tax Deducted at Source (Rule 31A(1))
1) Statement of deduction of tax under section 192 (Salary etc.) – Form No. 24Q
2) Statement of deduction of tax under sections 193 to 196D :
a) Form No. 27Q in Case of the deductee who is a non-resident not being a company or a foreign company or resident but not ordinarily resident; and
b) Form No. 26Q in Case of all other deductee.
8) Due Dates for filling quarterly TDS Statement (Rule 31A(2))
Due Date in the case of a deductor, being an office of Govt.
Due Date in the case of other deductor
|June||31st July||15th July|
|September||31st October||15th October|
|December||31st January||15th January|
|March||15th May||15th May|
9) Fee / penalty for default in furnishing TDS return :
|Section 234E||Failure to submit TDS/TCS statement in time||A Fee of Rs. 200/- every day from due date to actual date of filling TDS return..( not more than deducted/deductible Tax amount)|
|Section 271H||Failure to submit returns beyond one year or furnishing after due date without payment..||Penalty between ranging from a min. of Rs 10,000 to a max. of Rs 1,00,000 for not filling TDS return or furnishing incorrect information..|
Note: If TDS return is furnished after due date but within one year of prescribed due date after payment of deducted amount , fees, interest etc. then only fee u/s 234E would be applicable. If delay is beyond one year, both fee u/s 234A and penalty u/s 271H would be leviable.
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