The consequences of not filing TDS returns

Posted In | Finance | Accounting Software | India Accounting Tax

Tax Deducted at Source (TDS) is a means of collecting income tax in India under the Indian Income Tax Act of 1961. Any payment covered under these provisions shall be paid after deducting the prescribed percentage. It is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by the Indian Revenue Service (IRS). It is a crucial part of your income tax payments and hence requires due diligence. If you fail to file your TDS returns, you are likely to face some serious consequences. This article aims to shed light on these consequences.

 

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1. Penalties

According to section 234E of the Income Tax Act, if an individual fails to file their TDS return on time, they will be liable to pay a fine of Rs. 200 per day until the return is filed. The penalty will not exceed the TDS amount.

 

2. Prosecution

As per section 276B of the Income Tax Act, if an individual does not deposit the TDS to the government, they may face rigorous imprisonment for a term which can be between three months to seven years, along with a fine.

 

3. Disallowance of Expenditure

If TDS is not deducted from the payment made, then 30% of the expenditure will be disallowed and the same will be added back to your income.

 

4. Interest

If an individual does not deposit the TDS on time, they will have to pay interest on the delay. The interest is charged at 1.5% per month from the date at which TDS was deducted to the date at which TDS is deposited.

 

5. Penalty for Late Filing

If the TDS return is not filed within one year from the due date of filing, then a minimum penalty of Rs. 10,000 to Rs. 1,00,000 can be levied. As you can see, the consequences of not filing TDS returns can be quite severe. It is always advised to file your TDS returns on time to avoid these penalties and charges.

 

While it may seem like an additional burden, TDS return filing is a crucial part of your tax obligations. The penalties and consequences associated with not filing or delaying the filing of your TDS returns can be quite hefty and severe. Therefore, it is always better to stay on top of your tax obligations and file your TDS returns responsibly and on time.