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2013

Consequences for Non Payment or Late Payment of TDS

In Recent past it has been noticed that department has taken late payment of TDS very seriously and in addition to imposing Interest and Penalty for Late Payment, they also start initiating Criminal Prosecution against those responsible for Deduction and Payment of TDS.

Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted:

  1. If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole  or any part of the tax to the credit of the  Central Government  within the prescribed time, he shall be  liable  to action in accordance with the provisions of section 201 and shall be deemed to be an assessee-in-default in respect of such tax and liable for penal action u/s 221 of the Act. Further Section 201(1A)  lays down that such person  shall  be liable to pay simple interest.
    1. at 1% for every month or part of the 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
    2. at one and one-half percent 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.

    Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing of quarterly statement of TDS for respective quarter.

  2. Section 271C inter alia lays down that if  any person  fails  to  deduct whole or any part of tax at source or fails to pay the whole or part of tax under second proviso to section 194B, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him.
  3. Further, section  276B  lays  down that if a person fails to pay to the credit of the Central  Government  within  the prescribed  time, as above, the  tax deducted at  source  by him, he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, along with fine.
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