TDS is basically a part of income tax. It has to be deducted by a person for certain payments made by them. TDS or Tax Deduction at Source is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making payments.

Usually, the person receiving income is liable to pay income tax but the government with the help of TDS provisions makes sure that income tax is deducted in advance from the payments being made by any person. Thus, the recipient of income receives the net amount after deduction of tax at source.

 

When TDS should be deducted?

The concept of TDS is based on a simple principle i.e. tax is to be deducted at the time of payment getting due or actual payment whichever is earlier.


What is the due date for depositing the TDS to the government?

Time limit to Deposit TDS and File TDS Return

The dates of submitting TDS for every quarter are:

Month of Deduction

Quarter ending

Due date for TDS Payment through Challan

Due Date for filing of Return from the financial year 2018-19 for All Deductors

*For Govt. Deductor

For Other Deductor

April

30th June

7th May

31st July

May

7th June

June

7th July

July

30th September

7th August

31st October

August

7th September

September

7th October

October

31st December

7th November

31st Jan

November

7th December

December

7th Jan

January

31st March

7th Feb

31st May

February

7th March

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)

 

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.

 

Interest

Section

Nature of Default

Interest subject to TDS/TCS amount

Period for which interest is to be paid

201A

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

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 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.

 

The penalty for late filing of TDS return:

  • Penalty (Sec 234E): Deductor will be liable to pay the way of fee Rs.200 per day till the failure to pay TDS continues. However, penalty should not exceed the amount of TDS for which statement was required to be filed.
  • Penalty (Sec 271H): Assessing officer may direct a person who fails to file the statement of TDS within due date to pay penalty minimum of Rs.10,000 which may be extended to Rs.1,00,000.
  • The penalty under this section is in addition to the penalty u/s 234E.
  • This section will also cover the cases of incorrect filing of TDS return.

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/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.

 

TDS returns

Filing TDS returns is mandatory for all the persons who have deducted TDS. TDS return is to be submitted quarterly and various details need to be furnished like TAN, amount of TDS deducted, type of payment, PAN of deductee, etc. Also, different forms are prescribed for filing returns depending upon the purpose of the deduction of TDS.