Time limit to Deposit TDS and File TDS Return

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With the COVID-19 pandemic gripping the world in fear and the lockdown being inevitable, companies are facing a constant struggle to meet the compliances laid out by the Income Tax Act. Therefore this article attempts to clear all the ambiguity and bring forth the relaxations provided vide Ordinance 2020 in TDS provisions.

Latest Update

CBDT issued a circular on 20th May extending some timelines for AY 21-22

(i) The due date to file TDS return for Q4 of the FY 2020-21 is extended from 31st May 21 to 30th June 21.

(ii) The due date to furnish the TDS Certificate to employees in Form No. 16 is extended from 15th June 21 to 15th July 21.

TDS payment due dates

Edit
Month of DeductionQuarter endingThe due date for TDS Payment through Challan for all the deductors (including govt. deductors*)Due Date for filing of Return for the financial year 2020-21 for all the deductors
April30th June7th May31st March 2021
May7th June
June7th July
July30th September7th August31st March 2021
August7th September
September7th October
October31st December7th November31st Jan 2021
November7th December
December7th Jan
January31st March7th Feb31st May 2021
February7th March
March7th April (for govt. deductors)
30th April (for other deductors)

*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. Due Date for filing of Return for the financial year 2020-21 for all the deductors

  • Late filing fee (if you do not file return by the deadline)
  • Interest (if you do not deposit the TDS amount in time)
  • Penalty (if TDS return 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.

For example: Say that your payable TDS amount is Rs 5000 on 13th May and you file the return for Q1 on 17th November instead of the due date of 31 July. The delay is 105 days counting 17th November. Then the calculation comes out to Rs 200 x 105 days = Rs 21,000, but since this is greater than Rs 5000, you will have to pay only Rs 5000 as the late filing fee. Added to this, you also have to pay interest for delay in deposit of TDS which is covered in the next section.

Interest

Edit
SectionNature of DefaultInterest subject to TDS/TCS amount Reduced interest subject to TDS/TCS amount due to COVID – 19Period for which interest is to be paid
201(1A)(i)Non deduction of tax at source, either in whole or in part1% per monthFrom the date on which tax deductible to the date on which tax is actually deducted
201(1A)(ii)After deduction of tax, non payment of tax either in whole or in part1.5% per month 0.75% per month or part of the month for delay in remittance beyond due date only in the case of due dates falling between 20 March 2020 and 29 June 2020. If the sum remains unpaid after 30 June, the normal interest of 1.5% is chargeable.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), in case off late deposit of TDS after deduction, you have to pay interest. Interest is calculated at the rate of 1.5% per month from the date on which TDS was deducted to the actual date of deposit. Note, that this is to be calculated on a monthly basis and not on the number of days i.e. part of a month is considered as a full month.

  • Say that your payable TDS amount is Rs 5000 and the date of deduction is 13th January. Say you pay TDS on 17th May. Then the interest you owe is Rs 5000 x 1.5% p.m. x 5 months = Rs 375.
  • “Month” has not been defined in the Income Tax Act, 1961. However, in a number of High Court cases, it has been mentioned that it should be considered as a period of 30 days and not as an English calendar month.
    This amount is to be paid from the date on which TDS was deducted and not from the date from which TDS was due.
  • For the cases where due date is falling between 20 March 2020 and 29 June 2020, say you have deducted TDS on 19th April 2020 and not deposited the TDS amount within the due date 7th May 2020. Then you will be required to pay interest at 0.75% for the period from 19 April until the date of payment (assuming the payment is made in case you make the payment by 30 June 2020). If the payment is made after 30th June 2020 then interest at 1.5 per cent will be charged from 19th April 2020.
  • Also, consider the case in which you deposit tax one month after the due date. Say you have deducted TDS on 1st August. Then the due date is 7th September. Now say you deposit tax on 8th September (i.e. one day after the due date). Then interest is applicable from 1st August to 8th September i.e. for a period of 2 months. You now have to pay interest of 1.5% p.m. x 2 months = 3%.

Penalty

In the wake of the lockdown, the department has waived off all the penalty provisions for the period between 20th March 2020 to 30th June 2020 as per the Ordinance 2020. In the normal period of business, a penalty equal to the amount that was failed to be deducted/collected or remitted may be imposed.

Prosecution (Sec 276B):

If a person fails to pay to the credit of the Central Government —

The tax deducted at source by him as required by or under the provisions of Chapter XVII-B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with a fine.

Penalty for Late Filing of TDS Returns

Late filing fee (Sec 234E)

The deductor will be liable to pay by way of fees Rs.200 per day till the failure to pay TDS continues. However, the penalty should not exceed the amount of TDS for which the statement was required to be filed.

Penalty (Sec 271H)

The Assessing Officer may direct a person who fails to file the statement of TDS within the due date to pay a minimum penalty of Rs.10,000 which may be extended to Rs.1,00,000. The penalty under this section is in addition to the late filing fee u/s 234E. 4This section will also cover the cases of incorrect filing of TDS returns.

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