Consequences of non-filing or late-filing of TDS return

The Central Board of Direct Taxes (CBDT) has ordered all the income tax offices to penalize employers who deduct TDS but do not deposit them. The CBDT is of a serious view of non-filers of TDS. Accordingly, the government and private companies which deduct TDS from their employees and cause delay or neglect to pay the tax are liable to pay a penalty.

The Income Tax Department has warned the employers that penalty would be imposed if the TDS of the employees are not submitted within the due time.

Presently non-filing or late-filing of TDS returns or statements will fetch penal consequences. The first one involves fees for late filing under section 234E of the Income Tax Act. The second one deals with penalty for late-filing or non-filing of TDS statement under section 271H of the Income Tax Act.

1. Fees for late-filing of TDS under section 234E:  If someone has filed late income tax return, penalty in form of interest under section 234A is imposed when there is tax due from the assessee. In the like manner a new section 234E has been proposed under the head “Levy of Fee in certain case”. In that case the deductor will be liable to pay a fee of Rs 200/- per day till he files TDS statement.  However, the total fee should not be more than the amount of TDS deductible for which statement was needed.
2. Penalty for late-filing or non-filing TDS under section 271H: A new penal provision has been inserted in the Income Tax Act in the form of section 271H. It states that a deductor shall be liable to pay a penalty of minimum Rs.10,000/- to Rs.1,00,000/- for not filing the TDS statement within one year from the specified date of filing it.

Things to be remembered while filing TDS statement:

At the time of filing TDS statements, the deductor has to quote:

(i)  His tax deduction and Tax collection Account Number (TAN);

(ii) His Permanent Account Number (PAN) except where the deductor is a Government office;

(iii) The Permanent Account Number (PAN) of all employees;

(iv) Particulars of the tax paid to the Central Government along with challan identification number;

(v) Particular of amounts paid upon which tax was not deducted due to the issue of certificate of no deduction of tax under section 197 of the Act.

The new system inducted by the Department does not accept the TDS statement unless the penalty has been paid by the employer.

Object behind imposing penalty:

TDS accounts for more than 50% of total direct tax collections of the Revenue Department. In 2012-13 the target is fixed at Rs 5.70 lakh crore. The tax deductors have a tendency to hold back taxes deducted which deprives the government of its valuable taxes. Imposing penalty would compel such deductors to file the TDS within due time.