Time limit to Deposit TDS and File TDS Return FY 2023-24

Time limit to Deposit TDS and File TDS Return FY 2023-24

Union Budget 2022 updates

• New Section 194S- A person is liable for Tax Deduction at Source (TDS) at 1% at the time of payment of the transfer of virtual digital assets.
• Sale of immovable property under Section 194-IA- It is proposed to amend the amount on which TDS should be deducted. The person buying the property should deduct tax at 1% on the sum paid/credited or the stamp duty value of the such property, whichever is higher.
• New Section 194R- TDS at 10% should be deducted by any person who provides perks or benefits, whether convertible into money or not, to any resident for carrying out any business or profession by the such resident.

Forms for Filing TDS Returns

However, if tax is deducted at source under Sections 194-IA and 194-IB, the deductor shall furnish a challan-cum-statement in Form 26QB and Form 26QC, respectively. The deductor should provide the challan-cum-statement within 30 days from the end of the month in which TDS is deducted. As an exception, no return is required separately in such cases.

TDS Payment Due Dates

The dates for depositing the tax deducted at source and filing of TDS return for the financial year 2022-23 for all the deductor are shown in below table-

*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. Only tax deducted by the government office during the month of March 2023 should be deposited by 7th April 2023.

Penalty for Late Filing of TDS/TCS Returns

Late Filing Fee (Sec 234E)

Under Section 234E, the person who is required to deduct/collect TDS/TCS will have to pay a fine of Rs 200 (two hundred) per day until the TDS return is filed. The deductor of TDS shall be liable 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 you deducted TDS of Rs 50000 on 13th May 2023 and you file the return for Q1 on 10th November 2023 instead of the due date of 31st July 2023.

The delay is 102 days counting from 1st August 2023 to 10th November 2023.

Then the calculation comes out to Rs 200 x 102 days = Rs 20,400, but since this amount is greater than TDS Rs 5000, you will have to pay only Rs 5000 as the late filing fee.

In addition to this, you also have to pay interest for the delay in the deposit of TDS which is covered in the next section.

Penalty (Sec 271H)

The Assessing Officer may direct a person who fails to file the statement of TDS/TCS 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. This 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) are 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.

Interest on Late Deposit of TDS 

Note: The above interest should be paid before filing of TDS return.

Under Section 201(1A), in case of a 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.

• For example, the date of deduction of TDS of Rs 15,000 is 13th January 2023. If you pay TDS on 17th May 2023, then the interest you owe is from 13th January 2023, i.e. Rs 15000 x 1.5% p.m. x 5 months (Jan-May)= Rs 1125.
• “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.
• The interest is calculated from the date on which TDS was deducted and not from the date TDS was due.
• Also, consider the case in which you deposit tax one month after the due date. Say you deducted TDS on 21st February 2023. Then the due date is 7th March 2023. If you deposit tax on 8th March 2023 (i.e., one day after the due date). Then interest is applicable from 21st February 2023 to 8th March 2023 i.e. for a period of 2 months. You now have to pay interest of 1.5% p.m. x 2 months = 3% on the TDS amount.

Prosecution (Sec 276B)

If a person fails to pay TDS to the credit of the Central Government as required by or under the provisions of Chapter XVII-B, he shall be punishable with rigorous imprisonment for a term not less than three months but which may extend to seven years, and with a fine.

Penalty provisions due to COVID-19 lockdown 2020

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 failed to be deducted/collected or remitted may be imposed.

Penalty for Late Payment or Non-Payment of TCS

If the person fails to collect tax at source (TCS) or collects tax (TCS) but fails to deposit to the government within the prescribed due dates, then he is required to pay interest at the rate of 1% per month or part thereof on the TCS amount. The tax collector is liable to pay interest from the date on which such tax was collectible to the date the tax was actually paid.

Frequently Asked Questions

Q.1 Is TDS paid monthly?

If the deductors (other than the office of government) deduct TDS in any month, the tax must be paid on or before the 7th of the next month. However, the TDS deducted in the month of March can be deposited till 30th April. For TDS deducted on rent and purchase of property, the due date is 30 days from the end of the month in which TDS is deducted.

Q.2 How is TDS calculated on salary?

TDS on salary is calculated according to the income tax slab applicable to the employee after adjusting all eligible deductions and exemptions. Salary is one of the incomes where the employer (deductor) deducts full tax liability as TDS.

Q.3 Can I file a TDS return after the due date?

You can pay TDS after the due date, however, a penalty of Rs 200 per day as per Section 234E needs to be paid. The deductor is liable to pay the penalty for every day during which the failure continues. However, the amount of late fees cannot exceed the TDS.
Also, a penalty under Section 271H can be levied by the department which is in the range of Rs 10,000 – Rs 1,00,000. The penalty under this Section is in addition to the late filing fees specified above under Section 234E.