Consequences of Failure to Deduct or Pay the tax at source.

Hello folks.......

Hope you all are doing well..

So in this post we are going to discuss about the if any person has failed to deduct to or pay?tax at source then what will be consequences under section 201 of Income Tax?

???Interest shall be charged @ 1% p.m. or part of a month for the period of delay.

For Ex: Ankit Ltd. has made one payment on 03.01.2023 but tax was deducted at source on 20.01.2023, in this case interest shall be charged @ 1% for one month.

?? If person has deducted tax at source but tax was not deposited within 7 days from the last day of the month in which the deduction is made, interest shall be charged @ 1.5% p.m. or part of a month from date of deducting tax at source upto the date of depositing the amount.

For Ex: Sushma deduct TDS on 10.10.2022 but pays TDS on 31.12.2022, Interest under section 201 shall be charged from 10.10.2022 to 31.12.2022 @ 1.5% per month i.e., for 3 months.

If in the above case Sushma has not deducted tax at source on 10.10.2022 rather she deducted TDS on 31.12.2022 and she pays TDS on 17.01.2024, interest shall be charged in the manner given below:

?? Interest under section 201 shall be charged for 3 months @ 1% for the period 10.10.2022 to 31.12.2022.

?? Interest under section 201 shall be charged @ 1.5% per month for one month from 31.12.2022 to 17.01.2023.?

?? Penalty may be imposed equal to the amount which he has failed to deduct or pay.

??In following two situations he will not be considered to be in default

1. If there were sufficient reasons for not deducting tax at source.

2. Payment was made to a payee and such payee has shown the amount in his income and has paid tax and also return has been filed and it has been confirmed by a Chartered Accountant.

In this case assessee shall pay interest from the date when tax was to be deducted upto the date of filing the return.

Thanks.

Regards

@ankitkumarnayak

@sushmaverma

#TDS #taxation #penalty #logicbehindlaw