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Late filing of TDS return – Penalties, Prosecution & Interest Calculation

The various provisions of TDS are statutorily required to be strictly complied with. Any default in compliance can attract, levy of interest, penalty and in certain cases initiation of prosecution proceedings.

Failure to deduct tax

Where the employer has failed to deduct tax or when short deduction of tax has been done, following statutory provisions are attracted:-

Charging of interest u/s 201(1A) – The deductor is treated to be ‘assessee in default’ in respect of the short deduction/non deduction of tax. Under Section 201(1A) he is liable to pay simple interest @ 1% for every month or part of a month on the amount of tax in arrear from the date on which such tax was deductible to the date on which such tax is actually deducted. Further such interest shall be paid before furnishing the quarterly statement of each quarter.  Charging of interest u/s 201(1A) is mandatory and there is no provision for its waiver.

Procedure for interest calculation

 The calculation of interest is to be done as per Rule 119A and is summarized below:

• Where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be full month and interest shall be so calculated.

• The amount of tax in respect of which interest is to be calculated is to be rounded off to nearest multiple of Rs. 100 ignoring any fraction of Rs. 100.

Penalty u/s 221 - The assessee in default is liable to imposition of penalty where the assessing officer is satisfied that the defaulter has failed to deduct tax as required without good and sufficient reason. The quantum of penalty is not to exceed the amount of tax in arrear. Besides, a reasonable opportunity of being heard is to be given to the assessee.

Penalty u/s 271C – A penalty equivalent to the amount of tax the deductor has failed to deduct, is leviable u/s 271C. Such penalty is however only leviable by a Joint Commissioner of Income Tax.

Failure to deposit tax in govt. account after deduction

 Where the employee has deducted the tax at source but failed to deposit wholly or partly, the tax so deducted in government account, the following statutory provisions are attracted:-

• Interest u/s 201(1A)- The deductor is treated as an assessee in default and interest u/s 201(1A) is leviable @1.5% for every month or part of the nonth on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Further, the tax along with the simple interest u/s 201(1A) becomes a charge upon all the assets of the deductor.

• Penalty u/s 221- Penalty to the extent of tax not deposited is leviable by the A.O. as discussed earlier.

• Prosecution proceedings u/s 276 B- Where the deductor has failed to deposit tax deducted at source, in govt. a/c without a reasonable cause then he is punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine.

Failure to apply for TAN or to quote TAN

Where a person who is responsible to deduct tax at source has failed, without reasonable cause:-

• To apply for TAN within prescribed period or

• After allotment, failed to quote such TAN in challans for payment of tax or TDS certificate or returns of TDS (as required u/s 206) – then a penalty u/s 272BB of a sum of Rs.10,000 may be imposed by the assessing officer. However a reasonable opportunity of hearing must be given to the employer/deductor.

Failure to furnish TDS certificate or returns/statement of tax deduction at source

 (penalty u/s. 272A(2)) Where the employer has failed to issue TDS certificate (form 16) within one month of the end of financial year (by 31st of May of the next F.Y. for F.Y. 2010-11 onwards) or has failed to furnish the quarterly statement of tax in form 24Q, within the time prescribed u/s 200(3) (rule 31A), then a penalty of Rs. 100 is leviable for each day during the period for which default continues. The quantum of penalty is not to exceed the tax deductible and it is to be levied only by a Joint Commissioner or Joint D.I.T. after giving the assessee an opportunity of being heard.

Prosecution u/s 277- Where a person, who is required to furnish statement u/s 200(3) (quarterly statements) makes a false statement in verification or, delivers an account or statement which is false and which the person knows or believes to be false or does not believe to be true, then he is punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years along with fine. Where theamount of tax, which would have been evaded if the statement or account had been accepted as true, is 1 lakh rupees or less, then rigorous imprisonment may be from 3 months to three years and with fine.

The Finance Act, 2008 has introduced amendment in section 201 (w.e.f. 1.6.2002) which clarifies, that in case any employer, or any principal officer of a company;

• does not deduct, or

• does not pay,

• or after so deducting fails to pay the whole or any part of the tax, then such person shall be deemed to be an assessee in default. Further penalty to be charged u/s. 221 shall not be levied by the assessing officer unless he is satisfied that such failure to deduct and pay tax was without good and sufficient reasons.

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Points to remember while filing TDS statements for 4th Quarter of FY: 2013-14

One should take care of the following information before submitting TDS statements for 4th Quarter of Financial Year 2013-14

Payment of Taxes deducted/ collected:

  • In accordance with Central Government Account (Receipts and Payments) Rules, 1983, Government dues are deemed to have been paid on the date on which the cheque or draft tendered to the bank, was cleared and entered in the receipt scroll.
  • Rule 125 of Income Tax Rules, 1962 provisions for Electronic Payment of Tax by way of internet banking facility, for a Company and a Person to whom provisions of section 44AB of the Act are applicable.

Timely Filing:

  • The due date to file TDS statements for Q4, FY 2013-14 is 15th May, 2014.
  • Please submit the statement within due date to avoid Late filing fee, which, being statutory in nature, cannot be waived

Correct Reporting:

  • Please use your correct contact details, including Contact Number and email IDs in TDS Statements.
  • It is very important to report correct and valid particulars in respect to deductor and deductees. Please report the TAN of the deductor, Category (Government / Non-Government) of the deductor, PAN of the deductees and other particulars of deduction of tax correctly in the quarterly TDS statement.
  • Please make use of TAN-PAN Master from TRACES to Validate PAN and name of deductees before quoting it in TDS statement. Please note that there are restrictions for correction of PAN.
  • Quote correct and valid lower rate TDS certificate in TDS statement wherever the TDS has been deducted at Lower/Nil rate on the basis of certificate issued by the Assessing Officer. Please raise Flag “A”/ “B”, as appropriate, and quote valid and correct Certificate Numbers.
  • TDS statement must be filed by quoting challan(s) using correct Challan Identification Number (CIN), validated by CSI (Challan Status Inquiry) File and correct Book Identification Number (BIN), as appropriate.
  • Please maintain your correct Contact details in your Registration profile at TRACES.

Complete Reporting:

  • Please ensure completeness of your TDS statement by including all your deductees. Please note that the obligation to report each transaction correctly in the relevant quarter is on the deductor and non-compliance amounts to incorrect verification of completeness of TDS statement.
  • Completeness of statement will ensure that a C5, C3 or C9 correction can be avoided. It may be noted that CPC (TDS) does not encourage C9 corrections by addition of a new challan and underlying deductees.
  • Please also complete Annexure II (in case of 24Q) for all deductees employed for any period of time during the current financial year, including Annexure I for TDS details.

Downloading TDS Certificates from TRACES:

  • On the basis of information submitted by the deductor, CPC(TDS) will issue TDS Certificates that can be correct depending on correct and complete reporting by deductors.
  • Your attention is invited to CBDT circulars 04/2013 dated 17.04.2013, No. 03/2011 dated 13.05.2011 and No. 01/2012 dated 09.04.2012 on the Issuance of certificate for Tax Deducted at Source in Form 16/16A as per IT Rules 1962. It is now mandatory for all deductors to issue TDS certificates after generating and downloading the same from TRACES.
  • Please note that under the provisions of section 203 of the Income Tax Act, 1961 read with rule 31A, Certificate of tax deducted at source is to be furnished within fifteen (15) days from the due date for furnishing the statement of tax deducted at source.

 

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E-Filing of ITR for AY 2014-15

e-Filing of Returns/Forms is mandatory for:

  • Any assessee having total income of Rs.  5 Lakhs and above from AY 2013-14 and subsequent Assessment Years.
  • Individual/ HUF, being resident, having assets located outside India from AY 2012-13 and subsequent Assessment Years.
  • An assessee required to furnish a report of audit specified under sections 10(23C)(iv), 10(23C)(v),10(23C)(vi) ,10(23C)(via) , 10A, 12A(1)(b), 44AB, 80-IA, 80-IB, 80-IC, 80-ID, 80JJAA, 80LA, 92E or 115JB of the Act, shall furnish the said report of audit and the return of Income electronically from AY 2013-14 and subsequent Assessment Years.
  • An assessee required to give a notice under Section 11(2)(a) to the Assessing Officer from AY 2014-15 and subsequent Assessment Years.
  • All companies.
  • Firm (to whom provisions of section 44AB is not applicable), AOP, BOI, Artificial Juridical Person, Co-operative Society and Local Authority required to file ITR 5 from AY 2014-15 and subsequent Assessment Years.
  • An assessee required to funish return u/s 139 (4B) in ITR 7.
  • A resident who has signing authority in any account located outside India.
  • A person who claims relief under sections 90 or 90A or deduction under section 91.
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Important due dates of eTDS and eTCS returns

Important due dates in the month of March 2014 has been given below: 

• Due date to deposit tax deducted (TDS) in March 2014 - 30.04.2014

• eTDS return due date for salary Q4 (01.01.2014 to 31.03.2014) (form 24 Q) - 15.05.2014

• eTDS return due date for other than salary Q4 (01.01.2014 to 31.03.2014) (26Q) - 15.05.2014

• Due date for form 16(salary) FY 2013-14 - 31.05.2014

• Due date for Form 16A quarter four (01.01.2014 to 31.03.2014) - 30.05.2014

Due dates for eTDS returns (Form 24Q for salary and 26Q for contractors others, 27Q for non-resident for Financial Year 2014-15 

Due date eTDS return 24Q, 26Q 27Q and Form16, Form 16A

Sl. No.

Quarter ending

 For Govt offices 

For other deductors

Etds return Form 16A Etds return Form 16A

1

30th June 31st July 15th August 15th July 30th July

2

30th September 31st October 15th November 15th October 30th October

3

31st December 31st January 15th Feburary 15th January 30th January

4

31st March 15th May  30th May        (31st May   for form 16) 15th May 30th May   (31st May for form 16)

Due date for TCS (Tax collection at source ), eTCS return (27EQ), TCS certificate (27D) for March 2014 

TCS payment: 07.04.2014  (rule 37CA)

eTDS return (27EQ): 15.05.2014 (Rule 31AA)

Form 27D: 30.05.2014 (Rule 37D)

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