All About TDS Late Filing Charges and Interest Penalties

Interest & Penalty on TDS Late Filing

It is known by everyone who pays the tax that the Indian Government charges penalties. Those who make the payment late as well as for the late filing of TDS returns. So it is mandatory for everyone to know about the TDS interest that is levied by the government of India on the late submission of payment or returns. Given below is the information about the process of TDS late filing charges & interest penalties. How the interest is calculated?

TDS Interest for Non-Deduction & Non Payment

The TDS interest must be paid by the taxpayers in two different situations. The situations are- non-deduction / late deduction and non-payment / late payment.

Non-deduction of TDS:

  • 1% of the interest rate is applied per month from the mentioned deduction date till the actual deduction date.
  • For instance, if on 11th July, the TDS deduction of Rs 10,000 was to be made but instead of paying on 11th July. The deduction was made on 10th December then that deduction will be known as an actual deduction. In this case, for six months, 1 per cent of the interest rate will be charged i.e. from July to December.

Total TDS= Rs 10,000 x 1% x 6 months = Rs 600

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Non-Payment of TDS

  • 1.5 per cent of interest rate is charged every month if the TDS deduction is not made from the mentioned TDS payment date to the actual payment date. The most important thing to keep in mind is that the interest rate will be calculated monthly wise and will begin from the deduction date of the TDS and not from the due date.
  • For instance, the TDS payment due date is 7th May for the 19th March TDS deduction. In this situation, the interest will be calculated from the 19th March instead of 7th May, if the TDS payment is done after 7th May. If the person forgets to pay the TDS payment on the exact date and instead pays the other day, then also he has to pay the interest for two months.

According to section 201 which came into effect on 1 July 2012 by the Finance Act. The taxpayers who miss paying any part of the tax or even the entire tax for a resident payee will not be considered as an assessee-in-default if any of the conditions given below fulfil-

  1. If the resident recipient shows the returns in the salary under section 139
    Of the resident pays his due taxes in the salary which has been mentioned under the income return.
  2. If the resident recipient has considered the above-mentioned salary under the return of income. The penalty for Late or Short Payment of TDS

According to the authority of the government, the penalty that has been levied on the taxpayer should not be more than the amount which failed in the exemption or deduction.

Prosecution (Sec 276B)

According to the prosecution, if the taxpayers miss paying the deducted tax that will go into the account of the Central Government then under Chapter XVII-B, the taxpayer will get a strict punishment of going behind the bars which can be from three months to seven years along with penalty.

What Will Happen If There is a Delay in Issuing the e-TDS Statement?

Section 234E of the Income Tax Act came into the effect on 1 July 2012. According to this section, if the taxpayer exceeds the date of issuing the e-TDS statement, then he will be charged a penalty of Rs 200. But keep in mind that, the total penalty that will be charged must not be more than the total amount of quarterly deduction of TDS or the mentioned time limit. Firstly, the taxpayer must pay the late filing fee, and later the delayed eTDS statement must be filed.

To know more about the penalties charged, you can read section 271H of the Income Tax Act. Also, remember that the assessing officer will charge from Rs 10,000 to Rs 1 lakh if the taxpayer provides wrong details in the filed statement like the wrong PAN number and taking more time to file the eTDS statement i.e. more than one year.

What to Do to Save the Penalty?

To save the penalty, one can easily file a TDS return absolutely free via Gen TDS e-filing Software for five active hours. The utility is available on the website.

What are the Conditions Applied for Not Charging the Penalty if TCS/TDS Returns are Filed Late?

According to section 271H of the Income Tax Act, the penalty will not be charged if a person files the TCS or TDS returns late and this can only happen if the following conditions are met.

  1. Condition the tax deduction goes into the account of the Indian Government.
  2. TDS late filing fees and any interest is paid must go into the account of the govt.
  3. If the TDS e-filing is done within 1 year starting from the due date which has been mentioned for the same.

FAQs on TDS E-filing

“Q.1: What is the meaning of TDS?”

“Tax Deducted at Source (TDS) is a tax collection mechanism in India, under the Income Tax Act of 1961, in which the tax is collected at the very source of income i.e. the point at which the income is generated. Under this system, an individual or deductor who is responsible to make payment of prescribed nature to any other individual or deductee shall deduct tax at source from deductees income and deposits the same into the Central Government’s account on behalf of the deductee. TDS is one of the measures against tax-evasion practices and results in quick and efficient tax collection.”

“Q.2: What Refers to as TDS/TCS Statement?”

“TDS/TCS statement is an essence of TDS/TCS returns in an electronic form. TDS and reflects the sum of the amount paid as well as tax deducted at source and when these returns are filed in electronic and digital mode in accordance to the amendment in section 200(3) & 206C by the Finance Act, 2005, they refer to as quarterly TDS/TCS statements. This sum of the amount paid income tax deducted at source in e-TDS/TCS return must correspond with the totals mentioned on Form No. 27A. As per the tax Act, these quarterly statements need to be furnished from FY 2005-06 afterwards. However, the IT Department advised discontinuing the acceptance of e-TDS statements at the TIN which are related to Fiscal Years before 2007-08.”


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