Penalty for not deducting tds on credit basis?
This query is : Resolved
08 April 2012
If TDS other than salary is not deducted on credit basis but rather done on payment basis, what is the penalty under Income Tax Act
09 April 2012
In that case you will have to pay interest on late deduction of TDS @1% p.m.
09 April 2012
Late Payment interest in 1.5% not 1%
09 April 2012
When you are following the cash method of accounting it is obligatory on your part to deduct the TDS at the time of payment which you are doing hence there is no fault and no penalty or interest to be levied on you.
09 April 2012
Rate 1.5% p.m is on late deposit of TDS but for late deduction of TDS interset rate is 1% p.m.
09 April 2012
The penalty will be interest @1% per month (Sanjay is right that @1.5% per month is applicable for non-depositing after the deduction already made-which is not the case here).
It is further clarified that there is no system of income tax on cash basis BUT accounting system is allowed either on Cash or Mercantile basis, to be followed consistently.
It would be pertinent to note further that in the instant case since Credit has been done it means mercantile basis of accounting system does prevail and accordingly consequence of penalty does apply even in that view too.
It is further clarified that there is no system of income tax on cash basis BUT accounting system is allowed either on Cash or Mercantile basis, to be followed consistently.
It would be pertinent to note further that in the instant case since Credit has been done it means mercantile basis of accounting system does prevail and accordingly consequence of penalty does apply even in that view too.
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