With the COVID-19 pandemic gripping the world in fear and the lockdown being inevitable, companies are facing a constant struggle to meet the compliances laid out by the Income Tax Act. Therefore this article attempts to clear all the ambiguity and bring forth the relaxations provided vide Ordinance 2020 in TDS provisions.
1. TDS payment due dates
|Month of Deduction||Quarter ending||The due date for TDS Payment through Challan||Due Date for filing of Return from the financial year 2020-21 for All Deductors|
|*For Govt. Deductor||For Other Deductor|
|April||30th June||7th May||31st March 2021|
|July||30th September||7th August||31st March 2021|
|October||31st December||7th November||31st Jan|
|January||31st March||7th Feb||31st May
(31st July for Q4 of FY 2019-20 ending March 2020)
|March||7th April||30th April|
*All sums deducted in accordance with the provisions of Chapter XVII-B by an office of the Government without challan (Treasury Challan) should be deposited on the same day of deduction.
In case you have not deposited TDS by the correct date, the following penalties are applicable:
- Late filing fee (if you do not file by the deadline)
- Interest (if you do not deposit the TDS amount in time)
- Penalty (if TDS is not filed within one year of the due date)
2. Late filing fee
Under Section 234E, you will have to pay a fine of Rs 200 per day (two hundred) until your return is filed. You have to pay this for every day of delay until the fine amount is equal to the amount you are supposed to pay as TDS.
|Section||Nature of Default||Interest subject to TDS/TCS amount
Reduced interest subject to TDS/TCS amount due to COVID - 19
|Period for which interest is to be paid|
Non deduction of tax at source, either in whole or in part
|1% per month||
From the date on which tax deductible to the date on which tax is actually deducted
|After deduction of tax, non payment of tax either in whole or in part||1.5% per month
0.75% per month or part of the month for delay in remittance beyond due date only in the case of due dates falling between 20 March 2020 and 29 June 2020. If the sum remains unpaid after 30 June, the normal interest of 1.5% is chargeable.
|From the date of deduction to the date of payment|
Note: The above interest should be paid before filing of TDS return.
Under Section 201(1A), for the late deposit of TDS after deduction, you have to pay interest. Interest is at the rate of 1.5% per month from the date at which TDS was deducted to the actual date of deposit. Note, that this is to be calculated on a monthly basis and not based on the number of days i.e. part of a month is considered as a full month.
In the wake of the lockdown, the department has waived off all the penalty provisions for the period between 20th March 2020 to 30th June 2020 as per the Ordinance 2020. In the normal period of business, a penalty equal to the amount that was failed to be deducted/collected or remitted may be imposed.
Prosecution (Sec 276B):
If a person fails to pay to the credit of the Central Government —
The tax deducted at source by him as required by or under the provisions of Chapter XVII-B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with a fine.
5. Penalty for Late Filing of TDS Returns
1. Late filing fee (Sec 234E)
The deductor will be liable to pay by way of fees Rs.200 per day till the failure to pay TDS continues. However, the penalty should not exceed the amount of TDS for which the statement was required to be filed.
2. Penalty (Sec 271H)
The Assessing Officer may direct a person who fails to file the statement of TDS within the due date to pay a minimum penalty of Rs.10,000 which may be extended to Rs.1,00,000.
3. The penalty under this section is in addition to the late filing fee u/s 234E.
4. This section will also cover the cases of incorrect filing of TDS returns.
No penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if the following conditions are satisfied:
- The tax deducted/collected at source is paid to the credit of the Government.
- Late filing fees and interest (if any) is paid to the credit of the Government.
- The TDS/TCS return is filed before the expiry of a period of one year from the due date specified on this behalf.