ec TDS - Guide

In case of certain income, tax is deducted at source by the payee at the rate prescribed at the time of accrual or payment of such income to the payee.

DEEMED TO BE IN DEFAULT:

W.e.f. 1st June 2003, if any person does not deduct the whole or any part of the tax is deemed to be as assessee in default in respect of such tax.

PROCEDURE AND SCHEME OF TDS :

The obligation to deduct tax at source is upon the person responsible for paying income or amount which is subject to TDS. Therefore such person, i.e. payer has to follow the procedure for deducting the tax. The main responsibilities and procedure of TDS may be mentioned as under:

· The payer has to apply for TDS No. in Form No. 49 B.

· He is to deduct tax from the income/ payment mentioned in various sections, i.e. Sec.192 to 196D.

· The amount so deducted should be deposited within the requisite time to the credit of Central Government.

· Payee should be issued certificate of TDS on or before certain specified date

· Lastly, the payer should file return as prescribed for having deducted and paid tax.

CONSEQUENCES OF NON DEDUCTION OF TDS:

Non compliance with TDS provisions viz. failure to deduct tax at source, either in whole or in part or failure to remit the tax deducted at source has the following consequences.

A. Interest

If any person responsible for deducting tax at source is liable to pay interest under the following circumstances:

o does not deduct the whole or part of the tax

o after deducting the tax, fails to pay tax to the Government

Rate of Interest: Simple interest @ 12% p.a. on the amount

Period of Interest: Tax on which tax was deductible to the date on which tax is actually paid.

B. Penalty

Sec. 271C Failure to deduct the Sum equal to the amount

Whole or any part of TDS of tax failed to deduct

Sec. 272B Failure to quote PAN Rs. 10,000/-

Sec. 272BB Failure to apply for TAN Rs. 10,000/-

Sec. 272A (2) Failure to file return Rs. 100/- for every day

Sec. 272A(2) Failure to issue TDS Certificate Rs. 100 for every day

Sec. 220 Failure to deduct or pay tax Interest @ 12% p.a

C. Prosecution

Sec. 276B Failure to pay TDS Punishable with imprisonment for

Minimum: 3 months

Maximum: 7 years

TDS shall be deducted either at the time of payment or time of credit whichever is earlier.

Time of remittance to the Government

In case the TDS made every month, it shall be remitted to the bank within 7 days of the following month.

In case of TDS made on the last date of the financial year, it shall be remitted to the bank with in two months (i.e.31st May) from the end of the financial year.

TDS Certificate:

Form 16A

In case of deduction by every month, the Form 16A shall be issued before the end of the following month.

In case of deduction on the last day of the financial year, the Form 16A shall be issued within 7 days from the end of the two months (i.e. 7th June)

Annual Return

Annual return shall be filed in Form No. 26

Due date of filing the annual return is 30th June

Quarterly Statement

With effect from 1st April 2005, the person responsible to deduct tax shall file quarterly statement in the Form No. 26Q and it shall be filed on or before 15th July (extended up to 31st August 2005 ) for 1st quarter; 15th October for 2nd quarter; 15th January for 3rd quarter and 30th April for the last quarter.