14 January 2012
As per section 192(1) of the Act, Any person responsible for paying any income chargeable under the head "Salaries" shall at the time of payment , deduct income tax on the amount payable at the average rate of income tax computed on the basis of the rate in force for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year. I have observed in several cases thatTDS is not deducted on a) average basis or b) they are deducted per month bus but on random basis and not by computing estimated income of the assessee.However, any penal interest or penalty is not presecribed under the act for non compliance of this provision. Is there any any such interest or other provision for non compliance of this provision ?.
15 January 2012
Yes. Interest is payable u/s 201 if during the course of inspection, the company fails to prove to the AO (TDS) that it has sufficient ground to deduct tax at low rate.
TDS should always be deducted on average basis which is subject to change in case of change in salary of employee, declaration by employees, etc. What is required here is the sufficient ground for whatever percentage you apply.
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