3 % INTEREST ON LATE DEPOSIT OF TDS BY ONE DAY & PROSECUTION

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TDS under income tax  is main source of tax collection by the Government. However many times the tax deductors, after deducting TDS from specified payments, are deliberately not depositing the taxes so deducted in Government account and continue to deploy the funds so retained for business purposes or for personal use .CBDT is stressing on compliance of the due date of deposit of tds by the deductor. 

Interest on late deposit of TDS is applicable @ 1.5 % per month or part thereof .The period for delay is taken from date of deduction to date of deposit ,so  in specific cases a delay of one day may lead to pay Interest @ 3 % . Yes , it is true.

Interest on Late deposit of TDS 3 % for delay of one Day! 
Suppose: 
  • TDS deducted on 01.08.13 
  • In this case Due date will be 07.09.13 
  • If we deposit tax on 08.09.13 one day delay . 
  • Interest will be applicable for 2 months from 01.08.13(date of deduction ) to 08.09.13(date of deposit) for two months @1.5 % p.m=3%
read more from Interest on Late deposit of TDS 3 % for delay of one Day! 

CBDT has released following press release in this regards

It has come to the notice of Income Tax Department that many times the tax deductors, after deducting TDS from specified payments, are deliberately not depositing the taxes so deducted in Government account and continue to deploy the funds so retained for business purposes or for personal use. Such retention of Government dues beyond the due date is an offence liable for prosecution under Section 276B of the Income Tax Act, 1961. The defaulter, if convicted, can be sentenced to Rigorous Imprisonment (RI) for a term which can extend up to seven years.

The TDS units of Income Tax Department have been taking up prosecution proceedings in suitable cases where TDS has been retained beyond the due date. The Central Board of Direct Taxes has partly modified existing guidelines for identification of cases for launching prosecution. As per the revised guidelines, the criterion of minimum retention period of 12 months has been dispensed with. 

For the benefit of public at large, it is now clarified that defaulters, who have retained the TDS deducted and failed to deposit the same in Government account within due date, shall be liable for prosecution, irrespective of the period of retention.

However, the offence u/s 276B of the Income Tax Act can be compounded by Chief Commissioner having jurisdiction on the case, either before or after the launching of prosecution proceedings. In the recent past, several defaulters have submitted petitions for compounding of such offences and compounding orders have also been passed by the Competent Authority in suitable cases.

Due date to deposit Tax deducted at source is given below.

Rule :30.
(1) All sums deducted in accordance with the provisions of Chapter XVII‐B by an office of the Government shall be paid to the credit of the Central Government ‐

  • (a) on the same day where the tax is paid without production of an income‐tax challan; and
  • (b) on or before seven days from the end of the month in which the deduction is made or income‐tax is due under sub‐section (1A) of section 192, where tax is paid accompanied by an income‐tax challan.

Tax to be deducted by Govt  Office

1
Tax deposited without challan
Same day
2
Tax deposited with challan
7th of next month
3
Tax on perquisites opt to be deposited by the employer
7th of next month

(2) All sums deducted in accordance with the provisions of Chapter XVII‐B by deductors other than an office of the Government shall be paid to the credit of the Central Government ‐

  • (a) on or before 30th day of April where the income or amount is credited or paid in the month of March; and
  • (b) in any other case, on or before seven days from the end of the month in which‐
    1. the deduction is made; or 
    2. income‐tax is due under sub‐section (1A) of section 192. 

Tax deducted by other
1
tax deductible in March
30th April of next year
2
other months & tax on perquisites opted to be deposited by employer
7th of next month

(3) Notwithstanding anything contained in sub‐rule (2), in special cases, the Assessing Officer may, with the prior approval of the Joint Commissioner, permit quarterly payment of the tax deducted under section 192 or  section 194A or section 194D or section 194H for the quarters of the financial year specified to in column (2) of the Table below by the date referred to in column (3) of the said Table:‐

SrNo
Quarter ended On
Date of payment
1
30th June
7th July
2
30the September
7th October
3
31st December
7th January
4
31st March
30Th April

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