TDS

The due date for deposit of TDS to the credit of Central Government:

Tax deducted at source shall be deposited to the credit of Central Government in accordance with the following provisions:

1) In case deductor is an office of the Government

a) Where tax is paid without production of an income-tax challan On the same day when tax is deducted

b) Where tax is paid accompanied by an income-tax challan. On or before 7 days from the end of the month in which the deduction is made or income-tax is due under Section 192(1A)

2) In case of any other deductor

a) Where the amount is credited or paid in the month of March On or before 30th day of April

b) In any other case On or before 7 days from the end of the month in which the deduction is made or income-tax is due under sub-section (1A) of Section 192

Any sum deducted under section 194-IA shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB.

Similarly, any sum deducted under section 194-IB shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QC.

Further, any sum deducted under section 194M shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QD.

Mode of payment of TDS:

Taxes deducted at source shall be deposited to the credit of the Central Government in the following modes:

1) E-Payment: E-Payment is mandatory for :

a) All the corporate assesses.

b) All assesses (other than a company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.

2) Physical Mode: By furnishing the Challan No. 281 in the authorized bank branch

Note:

When tax is deducted/collected by a government office, it can remit the amount to the Central Government without the production of an Income-tax challan and by making only book adjustment. In such a case, it has to furnish Form No. 24G to NSDL within the prescribed time-limit.

Consequences of the default are made in the payment of TDS

A deductor would face the following consequences if he fails to deduct TDS or after deducting the same fails to deposit it to the credit of Central Government’s account:

a) Disallowance of expenditure: As per section 40(a)(i) of the Income-tax Act, any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.

However, if tax is deducted or deposited in the subsequent year, as the case may be, the expenditure shall be allowed as a deduction in that year.

Similarly, as per section 40(a)(ia), any sum payable to a resident, which is subject to deduction of tax at source, would attract 30% disallowance if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.

However, where in respect of any such sum, tax is deducted or deposited in the subsequent year, as the case may be, the expenditure so disallowed shall be allowed as a deduction in that year.

b) Levy of interest: As per section 201 of the Income-tax Act, if a deductor fails to deduct tax at source or after the deducting the same fails to deposit it to the account of Central Government then he shall be deemed to be an assessee-in-default and liable to pay simple interest as follows:

(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and

(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.

c) Levy of Penalty: Penalty of an amount equal to tax not deducted could be imposed under section 271C. The penalty shall be charged under section 221 if deductor fails to deduct and pay tax to the credit of Central Government. The penalty shall be levied to the extent the Assessing Officer directs, however, the total amount of penalty shall not exceed the amount of tax in arrears.

d) Prosecution: If a person fails to pay to the credit of the Central Government the tax deducted at source by him he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.