Tax Deduction at Source
A form of Direct Tax, TDS concept was initiated to collect tax at the very source of income. According to this concept, person liable to make payment (deductor) to other person (deductee) of specified nature, shall deduct tax at the time of making payment and remit the amount into Central Government’s bank account. Whereas, Tax Collection at Source (TCS) is tax collected from the buyer on sale of some specified goods, payable by the seller. TCS is provided under section 206C of Income Tax Act, 1961.
Tax Deduction and Collection Account Number (TAN) is a 10- digit alpha numerical number allotted by the department to those who require to deduct/ collect tax at source. Entities having TAN must file TDS returns. TDS returns are due to be filed on quarterly basis.
Salaried Individuals are not required to obtain TAN or deduct TDS. However, a proprietorship business and other entities like Private Limited Company, LLPs, etc. must deduct tax at source while making certain payments like salary, payments to contractor or sub-contractors, payment of rent exceeding Rs.1,80,000 per year, etc.
Busibells having TDS professionals can assist you in getting TAN Registration and can help file TDS returns online, timely updates regarding rules and regulations will be conveyed to clients.
TDS Late Payment Interest & Penalty
Late filing fine under section 234E is Rs. 200 per day until the return is filed, subject to maximum of TDS amount you are supposed to pay. For example, TDS amount is Rs 10,000 on 16th August and you pay it on 29th December (i.e. 136 days, counting 29th December).
The calculation comes out to Rs 200 x 136 days = Rs 27,200, which is greater than actual TDS amount of Rs 10,000, then you will have to pay only Rs 10,000 as late filing fee. In addition to this, you have to pay interest also as discussed below:
Under Section 201A, interest is calculated on a monthly basis from the date of deduction till the date of deposit of Tax.
- If tax is deducted but not yet deposited (wholly or partly) in government account- 1.5% per month (part of the month to be considered as full);
- If tax is not yet deducted (wholly or partly) – 1% per month
For example, say your payable TDS amount is Rs 10,000 and the date of deduction is 15th January. Say you pay TDS on 20th May. Then the interest you owe is Rs 10,000 x 1.5% p.m. x 5 months = Rs 750.
“Month” has not been defined in the Income Tax Act, 1961. However, in a number of High Court cases, it has been mentioned that it should be considered as a period of 30 days and not as an English calendar month.
This amount is to be paid from the date at which TDS was deducted, and not from the date from which TDS was due.
Penalty for late filing of TDS return:
- Penalty (U/s 234E): A penalty of Rs.200 per day till the date of failure, subject to the amount of TDS for which statement was required to be filed.
- Penalty (Sec 271H): Penalty of minimum of Rs.10,000 which may extend upto Rs.1,00,000 in case Assessing officer may direct a person who fails to file the statement of TDS within due date. This penalty is in addition to the penalty u/s 234E.
- This section will also cover the cases of incorrect filing of TDS return.
No penalty under section 271H will be levied in cases where payment made to Government in respect of tax deducted/collected at source, Late filing fees and interest (if any); and / or
where return is filed before the expiry on one year from the due date specified.
Packages on Offering
- TDS Return for one quarter along with TDS Consultancy for Ist Quarter
- TDS Return for two Quarters with consultancy on TDS
- TDS Return for all four Quarters along with consultancy for First Quarter