Tax Deducted at Source, is also recognized as TDS, which has been introduced with the aim of collecting tax from the very source of earnings. As per the concept of TDS, the deductor is the person, who is responsible to make a payment of a specific sum of amount to someone else, recognized as a deductee, shall deduct the tax at source as well as remits this amount in the account of the Central Government.
There are two types of scenarios relating to TDS, which are:
 Non-deduction of TDS
 Non-payment of TDS
TDS interest for late deduction
The rate of interest for late deduction of TDS is applicable @ of 1% per month. This rate of interest is applicable from the date on which tax shall be deductible to the date of actual deduction.
The Section for default for TDS Interest for late deduction is 201A. After the paying of interest, only then the TDS return filing is possible.
TDS interest for late payment
As per Section 201(1A) for late deposit of TDS after deduction, interest payment must be made @ 1.5% per month. This interest was calculated on a monthly basis and not on the number of days which is why part of a month is considered as a full month. The payment of this rate of interest amount is calculated towards the date on which TDS owes, from the date on which the TDS was deducted.
There is a provision towards paying the rate of interest on late TDS before paying TDS return or after the demand for the same has been raised by TRACES. There is also a provision to adjust such an interest from the sum remaining in any TDS Challan under any section. This rate of interest paid on delay in deposit of TDS is not considered as an expense under the Income Tax Act.
TDS not deducted relating to payment made to resident:
By virtue of provision introduced to section 201 by the Finance Act, 2012, the payer who fails towards deducting the whole or any part of the tax on the payment made towards a resident payee shall not be deemed towards being an assessee-in-default relating to tax not deducted by him, if the following conditions are met:
• The resident recipient has provided his return of income under section 139.
• The recipient of the resident has considered the above income in its return of income.
• The resident recipient had paid the taxes due on the earnings declared in such return of income.
• The payee of the resident provides a certificate towards this effect from an accountant in Form No. 26A.
But, such payer is also required to pay interest @ 1% from the day on which TDS is deductible towards the date of providing of return of income by such resident payee.
TDS Payment due date for Government as well as Non-Government
• The due date relating to the deposit of TDS for Non-Government deductors: It is the 7th of the next month, excluding for the month of March. For March, the due date shall be 30th April.
• The due date relating to the deposit of TDS for Government deductors: 7th of the next month if paid by Challan and the same day on which the TDS is deducted if paid by book entry.
TDS Payment Due Date For Public Holidays and Sundays
In case the TDS payment due date falls on Sunday or a public holiday, the TDS shall be paid on the next working day.
Penalty for Short or Late payment of TDS:
The penalty could be levied on the payer towards the extent of an amount that was failed to be deducted or remitted.
Prosecution (Sec 276B): In case a payer fails to pay the tax deducted in the direction of the credit of the Central Government, under the clauses of Chapter XVII-B, the payer would be punishable with severe imprisonment for a term which shall not be less than 3 months but which might extend to 7 years and with fine.
Late filing consequences
The Fees for the delay in providing the statements: (section 234E of Income Tax Act)
Effective from 1st July 2012, any delay in providing the eTDS statement shall result in a compulsory fee of Rs. 200 per day until the filing of the return. The total fees must not go beyond the total amount of TDS deducted for the quarter. The payment of late filing fees must be made before filing such a delayed eTDS statement.
The penalty for failure to provide statements and furnishing incorrect statements: (section 271H of Income Tax Act)
In case there was a failure to file eTDS statement delaying more than a year or providing incorrect details in the statement filed like PAN, Challan as well as TDS Amount etc, shall result in a fine ranging from Rs. 10,000 to Rs.1 lakh as directed through the Assessing Officer. The fine under this section is in addition to the interest u/s 234E.
No penalty under section 271H imposed for the delay in filing the TDS/TCS return if following conditions satisfies:
• The TDS is paid towards the credit of the Government.
• Also, late filing fees as well as interest (if any) is paid towards the credit of the Government.
• Filing of TDS return must be made before the expiry of a period of one year from the due date stated in this behalf.
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