Penalties for late filing of TDS returns in india

Penalties for late filing of TDS returns

The following penalties are applicable when an entity has not deposited TDS by the accurate date.

1. When an individual fails to file the return by the deadline, then a late filing fee is applicable.
2. An Interest has to be paid when an individual fails to deposit the TDS amount on time.
3. There is a penalty for individuals when TDS is not filed within one year of the due date.

What is Late Filing Fee?

As stated in Section 234E, an individual is required to pay a fine of Rs.200 on a daily basis until their return is filed. This amount has to be paid for every day of delay awaiting that the fine amount is equivalent to the amount that an individual is supposed to pay TDS. To clarify this further, suppose a person’s payable TDS amount is Rs 5,000 on 13th May. This amount is paid on 17th November or 189 days, counting 17th November. As a result, the calculation will be Rs.200 x 189 days = Rs.37,800. However, this amount exceeds Rs 5,000; therefore the individual has to pay only Rs 5,000. This will be the late filing fee.

What is Interest?

As stated in 201(1A) for delayed deposit of TDS after withdrawal, an individual is required to pay an interest amount. Interest is imposed at the rate of 1.5% per month from the issued date on which the TDS was deducted till the actual date of deposit. This calculation is made on a monthly basis and is not based on the number of the day. For instance, in any case, if the payable TDS amount is Rs 5,000 and the date of deduction is 13th January, then the TDS is paid on 17th May. The interest then imposed will be Rs 5000 x 1.5% per month x 5 months = Rs 375. The word “Month” has not been described in the Income Tax Act, 1961. Nevertheless, a number of High Court cases have mentioned that month should be considered as a period of 30 days and should not be acknowledged as an English calendar month. The above-mentioned amount is to be paid from the date on which the TDS was deducted and not from the date of which TDS was actually due. For instance, if the due date of TDS payment is 7th May, and an individual has deducted TDS on 19th April, then that individual is required to pay interest preliminary from 19th April and not on 7th of May. Under any circumstances, when an individual deposits tax one month subsequent to the due date, he or she deducted TDS on 1st August, and then the due date will be 7th of September. However, on deposit of tax on 8th September, which means one day past the due date, then interest will be applicable from 1st August till 8th September, which means for a period of 2 months. The interest amount will be 1.5% p.m. x 2 months = 3% interest. In addition, this interest should be paid prior to the filing of TDS return.

Penalty

The penalty imposed shall be equal to the amount that was failed to be deducted or remitted or collected. As per the rules laid for Prosecution in Sec 276B, if a person does not succeed to pay to the credit of the Central Government, then the Tax deducted at source by the person as mentioned in the provisions of Chapter XVII-B, then the individual shall be punishable with scrupulous imprisonment for a definite term. This term shall not be less than three months and may extend to seven years along with payment of a fine.

Penalty applicable on late filing of TDS return:

1. Penalty as per Sec 234E : Deductor will be inclined to pay a fee Rs.200 on a daily basis till the failure to pay TDS persists. Conversely, this penalty should not surpass the amount of TDS for which the statement was expected to be filed.
2. Penalty as per Sec 271H : The Assessing officer is eligible to guide the person on failure to file the statement of TDS within due date to a penalty. This penalty to be paid can be a minimum of Rs.10, 000; however it may be extended to Rs.1, 00,000.
3. In addition, there is a further penalty in addition to the penalty as per section 234E.
4. In addition, there lies a penalty for the incorrect filing of TDS return.

As per Section 271H, there will be no penalty imposed in case of postponement in the filing of the TDS or TCS return only when the following conditions are satisfied:

In conclusion, “Penalties for late filing of TDS Returns”, is an essential since informs citizens about the penalties, which are applicable when TDS Return is not filed on time.

1. When the tax deducted or collected at source is paid to the credit of the Government.
2. When the late filing fees and interest are paid to the credit of the Government if applicable.
3. When the TDS or TCS return is filed prior to the expiry of a period of one year from the due date.