The consequences of late filing of TDS returns or statements

Any failure on the part of a deductor in filing of TDS returns or statements or late filing of TDS returns or statements shall attract two kinds of penal consequences.

The penalty provisions dealing with delay or failure to furnish the statement of Tax Deducted at Source or that of Tax Collected as Source are as follows –

1. Fee for late filing under section 234E of the Income Tax Act: If an assessee has filed his income tax return after the due time, he shall be liable to pay penalty in the form of interest under section 234A of the Act if there is any due in payment of tax according to his return. In the same way section 234E has been proposed which has been made effective from 1.7.2012 which deals with the levy of fee in some cases. There a deductor shall be liable to pay a fee of Rs. 200/- for each day’s delay in filing TDS statement till the failure continues. However, the total fee should not be more than the amount of TDS deductible for which statement should have been filed.

2. Penalty for late filing or non- filing of TDS returns or statement under section 271H: A new penalty provision has been inserted the Income Tax Act, 1961 as section 271H which provides that a deductor shall be liable to pay penalty which amounts from Rs. 10,000/- to Rs 1, 00,000/- for failure in filing the TDS statement within a year from the due date within which he was supposed to file the same. This provision has been made effective from 1st July, 2012.

The basic liabilities of a person liable to deduct or collect tax at source:

1. The deductor or collector shall have to obtain Tax Deduction Account Number or Tax Collection Account Number and quote the same in all the documents.
2. The deductor or collector shall deduct or collect the tax according the rate that is applicable.
3. The deductor or collector shall have to pay the sum so deducted or collected to the credit of the Government.
4. The deductor or collector shall have to file the periodic statements.
5. The deductor or collector shall have to issue the TDS or TCS certificate for the tax deducted or collected by him.

Illustration:

If one is liable to deposit TDS amounting to Rs 6,000/- on 13th May and he pays the same on 16th November, there is a delay of 188 days. The amount comes to Rs. 200 x 188 days = Rs 37,600/-, but as it is greater than Rs 6,000/-, he shall have to pay only Rs. 6,000 as the late filing fee. Added to this, he shall also have to pay an interest as per section 271H of the Act.

The interest shall be calculated at the rate of 1.5% per month from the date at which tax was deducted to the date of deposit. It is to be calculated on a monthly basis and not on daily basis.

However, the term “month” has not been defined in the Income Tax Act, 1961.But in the judicial precedents it has been mentioned as a period of 30 days but not as an English calendar month.

Judicial precedents:

It has been held by Rajasthan High court in the case of M/s Dundlod Shikshan Sansthan and another vs. Union of India and ors., 2015 (9) TMI 807, that the constitutional validity of the fee imposed under section 234E is not liable to challenge for the reason that the performance provided by the statutory provision does not allow reasonable ground to be considered for its violation.