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How to Avoid Heavy Penalty and Fees on Late TDS Returns


Income tax law in India obligate every earner of income to remit tax to the Government, if the Income level exceeds certain limits, which is presently Rs 2,00,000 per annum. Women and Senior Citizens have some privilege of having this limit raised to Rs 2,50,000. These figures will change according to the Central budget every year depending upon the exigencies.

The tax law brings corresponding obligations on those who make payments such as Employers paying wages and salaries, Commercial establishments who make payments to various services like transporter etc, Banks and Financial Institutions paying Interest on deposits held by them, to deduct tax at source, shortly referred as TDS and remit the same to the Government directly.

These organisations are also obligated to submit quarterly statements to the Director General of Income Tax (Systems) giving details of the TDS made by them, failing which they are subjected to Penalties imposed by law.

TDS Returns

The returns that the TDS deducting person is to submit include

  1. Statement of TDS which is made under section 192 of Income Tax Act.
  2. Statement of TDS made under sections 193 to 196D of the Act.

It is important that these statements are submitted within certain time limits, which are 15 days from the end of the Quarter and without penalty within 1 year, as otherwise, the TDS maker is required to pay penalty on late TDS returns, which run per day of such delay.

Other Consequences

While TDS late returns will lead to penalty on late TDS returns by the tax deducting organisation on one side, it leaves the tax payer also into lurch in terms of his submission of returns. The TDS deductions are reflected spontaneously in the Income tax records of the individual under Form 26AS, which is referred by the Tax assessment authorities when assessing the Tax returns of the Tax paying Individual. When this information is not available, in strict terms, the tax payer may have to pay advance tax on his Income to make one’s Income tax returns complete.

Issue of TDS Certificates

The organisation doing TDS is also obligated to issue a Certificate for such deduction in Form 16A of the IT Rules 1962 and the current situation is that the TDS Certificates downloaded from TRACES portal of Income Tax department will only be valid. The TRACES record TDS only upon submission of the Statements referred above.

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