Under the provisions of the Income Tax Act 1961, TDS shall be deducted on specified payments such as Salaries, Interest, Dividends, Contractor Payment, Commission and Brokerage, Professional Fee, Rent, etc. The TDS deducted, needs to be deposited with the government before 7th of the subsequent month, for all months except for March, and within 30th April for the month of March. The persons required to deduct and pay TDS are also required to file quarterly TDS returns in the prescribed manner:
- For delay/ non-deduction of TDS, interest of 1% per month or a part thereof on the amount of such tax from the date on which it was deductible, to the date on which it is deducted is required to be paid.
- For TDS deducted but not paid to the government, interest of 1.5% per month or part thereof on the amount of such tax from the date on which it was deducted to the date on which it is actually paid.
- The person who is required to pay TDS and has failed to do so, shall be deemed to be in default and shall be liable to pay penalty of up to 100 percent of the amount of TDS not paid. In addition, rigorous imprisonment up to 7 years can be imposed on willful defaulters.
- If the assesse remains non-compliant regarding TDS provisions, the TDS amount and interest thereon shall be charged on the assets of the assesse or upon the principal officer who is required to deduct and pay TDS.
- Delay in filing of TDS returns attracts a late filing fee of Rs. 200 per day for every day of delay in filing (subject to maximum amount being the TDS amount in consideration).
- The expenses on which TDS was required to be deducted and paid and has either not been deducted or paid, such expense shall be disallowed in computation of total income and taxes thereon of the assesse.