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Tds

fakrudheen (Audit Assistant) (341 Points)

27 December 2013

We have running one trust for advancement of general public utility , so three month before we have conducted one exibition in the name of trust, while throughout the exibition we have incured so many expenses and also paid expense without deducting TDS, what is the consiquence of this senario????

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2 Replies

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 27 December 2013

Hello faraudin,

In your case section 271c will apply that is if the assesee fails to deduct the tds whhich is deductible then he needs to pay tax to the extent of amount deductible.

Hence ur case tds penalty you suppose to payat the rate of 1%.

Refer the section any doubt revert.

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NOUFAL (ACCOUNTANT) (762 Points)
Replied 28 December 2013

Non deduction, late deduction and Late deposit of Tax deducted at sources(TDS) may lead you to face following consequences.

A: Interest on late deduction /deposit of Tax at source.
B :Dis-allowance of Exp , on which tax has not been deducted /deposited u/s 40(a)(ia)
C: Penalty and prosecution.(271C and 276B)

A- Interest is calculated on the basis of

From the date when TDS was deductible till date of actual deduction,rate of interest is 1% p.m.
For delayed deposit, from date of deduction till actual date of payment, rate of interest is 1.5% p.m

Penalty for failure to deduct tax at source.

Section 271C. If any person fails to deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid.This penalty is imposable by Joint Commissioner.

Prosecution for failure to deduct /deposit tax at source

Section 276B. If any person fails to deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B then, such person he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.This penalty is imposable by Joint Commissioner

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