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Section 234E

Section 234E

Section 234E of Income Tax Act was introduced by the Finance Act, 2012 which applies for the late filing of TDS statement. As per the provisions of Section 234E, a late payment fees or penalty is applicable for the delay in furnishing the TDS statement by the Deductor as per the due dates. The late filing fees to be paid towards the delay in submission of quarterly TDS/TCS statement to the Income Tax Department. Let us look in detail about Section 234E of the Income Tax Act in this article.

Section 234E of Income Tax

Section 234E will not apply to specific cases where the TDS payment is made beyond the time limit that is prescribed for the payment of TDS under section 200(3). As per Section 200(3), the quarterly return to be filed after paying the TDS return within the prescribed time.

TDS Deduction Process

Any person who is liable to deduct or collect TDS is required to comply with the below basic duties that are as follows:

  • Deductor will have to quote the Tax Deduction Account Number (TAN) or the Tax Collection Account Number (Tax Collected at Source(TCS)) as per the requirement on all the relevant documents
  • The Deductor is supposed to submit/file the periodic TDS/TCS returns.
  • Deductor has to deduct or collect the relevant tax applicable as per the tax rate and submit the payments to the ITD
  • The Deductor issues TDS/TCS certificate against the tax deducted/collected by him/her

Due Dates for filing TDS/TCS Returns

The due dates of filing the TDS/TCS return for different quarters of FY 2019-20 is shown as below:

Quarter ending Due dates for the filing of TDS Statements (Both for the Government and other Deductor) The due date for the filing of TCS Statements
31/12/2019 31/01/2020 15/01/2020
31/03/2020 31/05/2020 15/05/2020

Basic provisions

An individual who fails to file the TDS/TCS return statement or does not file the TDS/TCS return within the due dates prescribed in this regard has to pay late filing process of fees as provided under section 234E and apart from the late filing process of fees, the person would be liable to pay penalty under section 271H.

Penalty for Late Filing TDS or TCS Return

As per Section 234E, a late fee of Rs. 200 per day which is applicable to be paid to the Income Tax Department (ITD) towards the late filing of TDS/TCS return. That means the fine will be levied for every day of delay until the fine amount is equal to the amount of the TDS and not more. The late fee should be deposited before filing the TDS/TCS return.

Penalty for Not Filing TDS or TCS Return

If a person fails to file TDS or TCS returns pertaining to the deduction or collection of tax at source within the stipulated date, he/she can also be penalized with a fee which is not less than Rs 10,000. The amount of penalty could go up to Rs. 1 lakh. The taxpayer will be supposed to pay the penal amount along with the late filing fee.

  • The assessee will not incur any penalties under this provision if the following conditions are satisfied:
  • The taxpayer substantiates the delay with a reasonable cause.
  • The tax deducted/ collected at source is credited to the Government.
  • The late filing fee and interest (if any) are credited to the Government.
  • The TDS/TCS return is filed within a year from the specified due date.
  • Waiver or reduction of penalties by the Commissioner of Income Tax.

Section 234E Fees Computation

Section 200A of the Income-tax Act that deals with the processing of TDS, for deciding whether the amount is refundable or payable to the Deductor along with the refund payment process if there is an excess amount paid by the Deductor. Section 200A Provisions are amended by the Finance Act, 2015 to allow the fee computation payable section 234E at the period of processing of TDS statements.

As the TCS statement and TDS, statement mechanism is similar, a new section 206CB has been inserted by the Finance Act, 2015 to give for processing of TCS statements in line with the requirements for the processing of TDS statement as per section 200A of the Income-Tax Act. At the time of processing the TCS statement, the new section 206CB which provides for the mechanism for computation of amount payable under section 234E to the Income Tax Department.