Attention Deductors - Deposit of TDS

Attention Deductors - Deposit of TDS

-Dr. Lalit Kumar*

The TAN holders or deductors are required to deposit the amount deducted from the payments and issue a TDS certificate to the recipients of the payment. There are two ways to pay the TDS in the Income Tax Department; firstly without generating the Income Tax Challan and Secondly with generating the Income Tax Challan. In the case of TDS deposited without generating Income Tax Challan, the due date for the deposit of TDS is the same day when the payment is made and tax is deducted. In the case of TDS deposited by Income Tax Challan, the due date for the deposit of TDS is the 7^th of the coming month in which the deduction is made from the payment.

There are a few exceptions, in case the sum is deducted under section 194-IA or 194-IB or 194M then it is required to generate challan in Form no. 26QB or 26QC or 26QD; the due date is 30 days from the end of the month in which the deduction is made.

How to pay or deposit the amount of TDS:

Generally, the TDS is processed through electronic fund transfer at the time of making payments on which TDS is required to be deducted. For example, the Government Department or organizations remit the TDS without generating Income Tax Challan, by making book adjustments or book transfers and furnishing 24G or 26G to NSDL every month. However, if it is not possible, then the deductor can also furnish Challan No. 281 in an authorized bank for processing the amount of TDS to the Income Tax Department.

What will happen if TDS is not deducted or deposited by the Deductors?

It is the duty of the deductor to deduct the TDS before making payments and remit the same by adopting the above-said procedure. In case, the deductor failed to deduct TDS from the payment and not deposit the same to the Income Tax Department, it means the deductor is in default.

In such circumstances, (a) in case the deductor fails to deduct TDS, it is required to pay simple interest @1% per month or part of a month, on the amount of TDS for the period of delay (months or part of a month between “Date of tax deducted and date on which tax was deductible). (b) in case the deductor deducted the TDS but not deposited, it is required to pay simple interest @1.5% per month or part of a month, on the amount of TDS for the period of delay (months or part of a month between “Date of tax actually paid and date of TDS deducted).

Further, under section 271C, there is a penalty provision equal to the amount of TDS not deducted by the Deductor. Such penalty can be up to the amount of tax in arrears as per the provisions of section 221. Apart from the penalty, the deductor shall be punishable with rigorous imprisonment for a term not less than 3 months but which may extend to 7 years.

Are you interested in an Online Course related to Income Tax?:

1. https://smartinstituterls.blogspot.com/2022/12/income-tax-matters-in-government.html 

2. https://smartinstituterls.blogspot.com/2022/12/computation-of-income-tax-liability.html

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