Interest And Penalty for TDS Default
Interest and penalty can be levied if a person who is required to deduct TDS under the statutory provisions of the Income Tax Act, fails to do so. In this article, we discuss the applicable interest and penalty for TDS default.Interest Provision Under TDS
The following are TDS default for which interest is payable –- Person liable to deduct TDS does not deduct TDS at all.
- Person after deducting TDS fails to pay whole or part of the tax to the credit of the Government.
- Interest in case of non-deduction of TDS – Interest shall be levied @1% for every month or part of the month from the date on which TDS was deductible till the date on which TDS actually deducted.
- Interest in case of non-payment / late payment of TDS – Interest shall be levied @1.5% for every month or part of the month from the date on which TDS was deducted till the date on which TDS was actually credited to the Government.
TDS not Deducted on Payments made to Resident
As per proviso to Section 201 of the Income Tax Act, if the person liable to deduct TDS fails to deduct the whole or part of the TDS on payment being done to a resident, then, in such cases, the person liable to deduct TDS cannot be deemed as an assessee-in-default for non-deduction, if all the undermentioned conditions are satisfied –- The recipient is a resident in India;
- The recipient has furnished his income tax return under section 139;
- The recipient has paid applicable taxes due on the income declared in an income tax return filed by him;
- The resident payee furnishes a certificate from an accountant in form No. 26A to this effect.
Penalty provisions under TDS
The penalty provisions under TDS are as follows:Penalty For Non-deduction / Non-payment Of TDS
As per provisions of Section 271C penalty for non-deduction/non-payment of TDS would be an amount equal to tax not so deducted/paid.Penalty For Delay in TDS Return Filing
A penalty of INR 200 per day is payable until the failure continues. However, a maximum penalty payable would be subjected to TDS amount.Related Guides
Popular Post
Starting a small business can be a transformative venture, offering the exciting opportunity...
Tax deduction at source, shortly and popularly known as TDS, was introduced by the Income Tax...
Goods & Services Tax Certificate is issued to people who are registered under GST...
GST registration applies to all individuals and entities supplying goods or services in India. GST...
Gift tax in India is applied when the value of the received gift exceeds ₹50,000 in the...
The Union Budget 2025 has brought significant changes to India’s personal income tax structure, raising the...
The Goods and Services Tax (GST) is an indirect tax system introduced in India in 2017. It functions...
A trademark search is simply checking if another person or organization does not already own the...
Section 194H of the Income Tax Act in India mandates the deduction of Tax at Source (TDS) on commission or brokerage...
Section 80G Deduction is a facility available in the Income Tax Act which allows taxpayers to...
The Income Tax Department (ITD) has not provided specific guidance on crypto taxes for Indian investors. However...
Internal audit applicability is a critical concept for companies in India, impacting various...
In the business world, two main types of companies exist: private company and public company...
Ministry of Finance vide a Notification No 05/2022- Central Tax (Rate) dated 13.7.2022 has issued...
The Central Board of Indirect Taxes and Customs (CBIC) has recently announced an extension...
Depreciation is a key concept in finance and accounting. It helps us manage how the value of...
Form 10IA of the Income Tax Department must be filed by taxpayers claiming income tax deduction...
The Goods and Services Tax (GST) system in India has been a significant reform in the country's...
India's Gross Domestic Product (GDP) benefits significantly from the substantial...
The Finance Act, 2023 introduced the MSME 45-day payment rule under Section 43B(h) of the Income Tax Act...
The Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, was announced by Union Finance Minister...