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Penalty for Late Filing of TDS Return

All about TDS, Return Filing & Due Dates

Penalty for Late Filing of TDS Return

Tax Deducted at Source (TDS) is a crucial mechanism in India’s taxation framework that helps collect income tax directly from the source of income. This method is applied to various income types, including salaries, interest payments, and rent. TDS plays a significant role in curbing tax evasion by ensuring that tax is deducted at the point of income generation and remitted to the government, distributing the tax collection burden evenly throughout the year. In this article, we will delve into the details of TDS, the Penalty for Late Filing of TDS returns, and the associated due dates.

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Meaning of TDS

As mentioned, Tax Deducted at Source (TDS) is a method used in India to collect income tax, and it is governed by the Indian Income Tax Act of 1961. TDS requires the payer, or deductor, to withhold tax at the source from payments made for various services and transactions such as salaries, commissions, rent, interest, payments to contractors, and professional fees. The tax that is withheld must then be remitted to the government.

An illustration is given below:

Description	Amount (Rs)
Audit Fees Bill	50,000
Less: TDS@10% (Section 194J)	5,000
The net amount payable to the Vendor	45,000

TDS Due Date – Time limit for remittance of TDS

The due dates for remitting Tax Deducted at Source (TDS) in India are structured as follows:

For Tax Deducted from April to February: The due date for remittance is the 7th of the following month.
For Tax Deducted in March: The due date for remittance is April 30th.

Understanding TDS Return

TDS returns are quarterly statements that the deductor must submit to the Income Tax Department. These statements detail the TDS collected and deposited by the deductor. It is mandatory for all deductors to file TDS returns, and these documents serve as proof of tax compliance. Failing to file TDS returns can lead to penalties and other legal complications.

Forms for TDS Return Filing

Different forms are prescribed for filing TDS returns in India depending on the type of payment from which the tax has been deducted. Here are the specific forms used:

Form 24Q: For TDS on salaries.
Form 26Q: For TDS on all payments other than salaries.
Form 27Q: For TDS on payments made to non-residents.

TDS Return Due Date

TDS returns are required to be filed quarterly, and the due dates for each quarter are as follows:

Months Covered	Due Date
April to June	31st July
July to September	31st October
October to December	31st January
January to March	31st May

TDS Penalty

Here are the primary penalties and consequences for not adhering to TDS regulations:

Penalty for Non-Deduction of TDS

As per Section 201(1A) of the Income Tax Act, the interest for non-deduction and late payment of TDS will be calculated as follows:

Interest for Late Deduction: If TDS is not deducted on time, interest is charged at 1% per month or part of the month, calculated from the date the tax was deductible until the actual date of deduction.
Interest for Late Payment: If TDS is deducted but not deposited timely, interest at 1.5% per month or part of the month is levied from the date of deduction to the date of deposit.

Under Section 40(a)(i)/(ia), if TDS is not deducted or deposited, the expense will be disallowed for computing taxable income:

For Domestic Payments: If TDS is required but not deducted, 30% of the expense amount will be disallowed when computing taxable income.
For Payments to Non-Residents: The entire amount of the expense on which TDS was required but not deducted will be disallowed.