What are the consequences of TDS defaults and non-payment to government?

  • Failure to deduct tax, deducting less tax, delay in payment of the deducted tax to the Government, makes the deductor an assessee liable to penalty, which is equal to the amount for which the assessee is a deemed defaulter.
  • In case of non-deduction or less deduction or delay in deduction of tax, an interest of 1% is levied on the tax per month or part of the month. In case of delay in payment of tax after deducting, interest of 1.5% is levied per month or part of the month. The interest is applicable till the time the tax deducted is not credited to the Government.
  • In case of delay in payment of tax after collecting it, interest at 1% per month or part of the month shall be levied till the time the tax is not paid.
  • Failure on part of the deductor to pay the tax deducted at source, to the credit of Central Government makes him liable to rigorous imprisonment of a minimum period of three months but which may extend to seven years.
  • Delay in filing TDS quarterly statements attracts: 1. Late fee of Rs. 200/- per day for each day of default, subject to certain limits (u/s 234E). 2. Minimum penalty of Rs. 10, 000 (may be extended to Rs. 1 lakh).(u/s 271H)
  • Download the justification report to know the details of TDS defaults if any, on the processing of TDS statement, etc. from the TRACES website www.idscpc.gov.in

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