Friday, September 6, 2013


on Friday, September 6, 2013

One of the assessee had filed his tds statement for 1st quarter of F.Y. 2012-13 delayed by 260 days, he is in receipt of notice showing late fee of Rs. 200/- per day i.e. aggregate late fee of Rs. 52000/- for 260 days, regarding late fee on late filing of TDS statement.

Provisions of Sec. 234E has been made applicable w.e.f. 1st July, 2012.

Fee for default in furnishing statements.

234E. (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.
(2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.
(3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.
(4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.

It states that “ Amount of late fee shall be paid before delivering a TDS statement”, It means that any late fee should have been deposited just at the time of delivering TDS statement and not later than this. The authorized TIN- NSDL centre which accepted the TDS statement also accepted these without late fee, as well as the software utility of the TDS department itself accepted these without late fee. 

Once the TDS statement has been accepted without late fee, then such late fee cannot be recovered later on. However this late fee cannot be waived even for any reasonable. 

As per provisions of Sec. 234E(4) late fee is applicable for “TDS statement which is to be delivered or caused to delivered for tax deducted at source or tax collected at source, as the case may be, on or after 1st July 2012”. 

Late fee cannot be recovered for TDS statements which were due for F.Y. 2011-12 as well as TDS statement late fee cannot be recovered for F.Y. 2012-13, if not collected at the time of delivering TDS statement to the department.

On the other hand it is also pertinent to note that the law has not made any person responsible, to deposit late fee, in case of default in depositing late fee along with tds statement, which can be inferred from the provisions of Sec. 204 of the act, which states as under:-
"For the purposes of [the foregoing provisions of this Chapter] and section 285, the expression person responsible for paying" means
(i) in the case of payments of income chargeable under the head "Salaries", other than payments by the Central Government or the Government of a State, the employer himself or, if the employer is a company, the company itself, including the principal officer thereof;
(ii) in the case of payments of income chargeable under the head "Interest on securities", other than payments made by or on behalf of the Central Government or the Government of a State, the local authority, corporation or company, including the principal officer thereof;
[(iia) in the case of any sum payable to a non-resident Indian, being any sum representing consideration for the transfer by him of any foreign exchange asset, which is not a short-term capital asset, the [authorised person] responsible for remitting such sum to the non-resident Indian or for crediting such sum to his Non-resident (External) Account maintained in accordance with [the Foreign Exchange Management Act, 1999 (42 of 1999)], and any rules made thereunder;]
(iii) [in the case of credit, or, as the case may be, payment] of any other sum chargeable under the provisions of this Act, the payer himself, or, if the payer is a company, the company itself including the principal officer thereof;
[(iv) in the case of credit, or as the case may be, payment of any sum chargeable under the provisions of this Act made by or on behalf of the Central Government or the Government of a State, the drawing and disbursing officer or any other person, by whatever name called, responsible for crediting, or as the case may be, paying such sum.]”

The section 204 specifically says that “for the purposes of the foregoing provisions of this Chapter means Sec. 190 to Sec. 203 and for Sec. 285 of the act the following persons would be responsible” , so it is clear that for the purpose of Sec. 234E none of the person has been made responsible, therefore if any late fee is due and not deposited along with the tds statement none can be held responsible to deposit it.

Demand of late fee cannot be raised also by way of processing of TDS statement, because provisions of Sec. 200A of the act does not cover default in payment of late fee, except any arithmetical error, or incorrect claim, or default in payment of interest, any tds payable or refundable etc. 
In view of the above it is my opinion that late fee cannot be recovered later on by way of any notice, neither notice of demand U/s 156 can be issued for this. Any queries and suggestions are welcome on this issue.

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  1. Late fee can be charged to TAX AND TDS PAYING AND FILING PUBLIC.
    No such late fee is payable BACK to DEDUCTORS/Deductees if TRACES DELAYS processing 26AS by even 3 Months.

  2. Mr. Mehta,

    I agree with you . we are handling TIN FC but there is no any type of instruction from NSDL related to Late fee.
    in my point of view its unnecessary burden on accesses and out of line

    1. I also agree with you but the question is how should i proceed against any notice for payment of late fee after filing tds statements. Bcz once we have filed the tds return and got the notice to pay late fee then it will show as standing liabilities on the deductor untill they pay the late as per notice amount or notice get invalidated by the department

  3. Sir,

    Plese provide detailed exaple in this regard.

  4. Dear Sir

    I agree with you that law has not specified that who will pay penalty but in case of interest on late deposit of tds the burden is on deductor so as per logical interpretation we can say penalty burden is also on the deductor of tds as per law maker's view and my other question to you that how to respond to notices of penalty for quarters before 1st July 2012.

    Jitender Singh Solanki

  5. From the above .....i.e "other than payments by the Central Government or the Governemnt of a State" does it mean that the Govt. offices are excluded from paying any penalty for late filing....!!!

    explerts please clarify.

  6. Rajesh sir, your point of view is perfect. In this situation I want to share this. TDS is deducted for the help of Government and ETDS work and Charges are handled by the Deductor for the Deductee. So the ultimate beneficiaries are the Central Govt and the Deductees. If Penalty u/s 234E imposed on the default by the deductor, he further suffered. So Incometax Department must see this fact and kindly remove or postpone the penalty u/s 234E and first properly inform or educate the Deductors in this regard. Because money properly deposited to the central govt only ETDS retruns are delayed. Further there is shortage in ETDS filers also. This is because of low income and high tension work on ETDS. All are causes for delay in ETDS filing. So deductors strongly oppose penalty u/s 234E.

  7. Dear Mr Mehta,

    I am impressed from your approach and depth of catching the main nerve. The points forwarded by you carry weight and I am hopeful that if anybody files appeal against penalty u/s 234E on these grounds, he would surely win the case.

    Sir, have you filed appeal in any such case and if yes, what was the outcome? Please reply.

    Thanks and regards,

  8. It is to be noted that the deductors face practical problems in obtaining the required BIN Nos from the government officials and hence are unable to file the TDS returns online within due dates. Moreover, no proper education is provided to them to file the said returns themselves. They (mostly school teachers) face hardships in performing these burdensome ETDS work both due to lack of knowledge and negligence on the part of government officials. But they seldom fail in deducting tax and depositing the said amount to the credit of the Central Government. Only failure is a slight delay in E-Filing of TDS returns which involves no malafide intentions and hence stringent penalties can be waived on justified grounds.

    Quazi Abdul Wali

  9. One of my clients has received notice u/s 154 and 200A asking to pay Rs. 2345/- towards additional late filing levy against the processing of latest corrections. What does this levy mean? Can it be levied for the quarter 3 2012.13? Are the above mentioned advices applicable for this late fee also?

    1. As explained above penalty for late fees shall be applicable from 01.07.2012 ,so it is also applicable for 3rd quarter 2012-13.
      Late fees applicable is 200 per day but subject to maximum tds amount .In your case it appears that in your return tds amount was 2345 ,so late has been imposed maximum up to tds amount.

      In our opinion department may waive of the late fee for a specific period ,so you should wait for some more period and then take decision .

      On thing sure that your amount can not be increased as it is already reached at maximum level (equal to tds amount)

  10. Professional's must file a writ petition against this section, it is time taking process and fine is too high and daily basis. They may fine Rs. 500 per month max

    1. Mr. Jayanta Routh,
      As a Professional we are helpless in this regard. Because I have tried my level best to consolidate government offices in my area to file a WRIT in HIGH COURT of madras. But most of the government offices are not even responding our e-mails. and also they don't understand the seriousness of this issue. They are just relying on the tin-centres in my area. I am having a government client base of 75+ only few of my clients have received 234E Late Fee notice. In my region 370+ offices have received such notice from TRACES. In such a case how is it possible for a professional to help a government drawing officer and to protect from 234E.

  11. Dear Mr. Rajesh,
    Can you please share the procedure to be done against such notice from the TDS Department, if we opt not to pay such late filing fees u/s 234E, raised by the Department in Intimation u/s 200A.

  12. As I am Government deductor and I had filed my 24Q1 for FY 2013-14 on 17/07/2013...
    as per notification by CBDT for Govt. Deductor.. due date for filing eTDS return for Q1 is 31/07/2013 and I had filed my 24Q1 well before due date but I also get notice from TRACES u/s 200A that u had filed ur 24Q1 two days late so u have to pay Rs. 400 as late fee... My category of TAN is Govt. I had registered with the same on TRACES
    I dont understand that why TRACES ignores notifcation by CBDT ??

    1. Due date for govt deductors has been extended to 31.03.2014 for q2 (2012-13) to q3(2013-14) ,so penalty will be deleted from your account ,no need to deposit at all

  13. Sir can any PIL can be filed in this issue in Madhya Pradesh High Court??

    1. Sir, Please call Mehta ji ,Phone number is given above