Introduction to TDS Regulations

The Tax Deducted at Source (TDS) is a pivotal part of income tax compliance, ensuring prompt deduction and payment of taxes by those responsible for deducting. The fiscal year 2023-24 introduces key updates to TDS regulations, requiring a thorough understanding of compliance mandates.

Key Budget Updates

• Introduction of TDS on online gaming income under Section 194BA.
• Provision for non-residents with Indian mutual fund income to provide Tax Residency Certificates for TDS benefits under Section 196A.
• Reduction of TDS rate on PF withdrawals for individuals without PAN under Section 192A.
• Removal of TDS exemption on interest from listed debentures under Section 193.
• Increase in TDS threshold on cash withdrawals by cooperative societies under Section 194N.

Forms for Filing TDS Returns

• Form 24Q: Quarterly TDS statement for salary payments.
• Form 27Q: Quarterly TDS statement for non-salary payments to non-residents and foreign companies.
• Form 26Q: Quarterly TDS statement for instances like professional fees and interest payments.
• Form 26QB and Form 26QC: Challan-cum-statement for TDS under Sections 194-IA and 194-IB, respectively.

TDS Payment Due Dates and Penalty Framework

Due Dates for TDS Payment

Timely tax deposit is crucial for compliance. Below are the due dates for TDS deposit and returns for fiscal year 2023-24:

Penalties for Late Filing of TDS Returns

Quarter Ending: 30th June 2023

• April 2023: TDS Deposit by 7th May 2023, TDS Return by 31st July 2023
• May 2023: TDS Deposit by 7th June 2023
• June 2023: TDS Deposit by 7th July 2023

Quarter Ending: 30th September 2023

• July 2023: TDS Deposit by 7th August 2023, TDS Return by 31st October 2023
• August 2023: TDS Deposit by 7th September 2023
• September 2023: TDS Deposit by 7th October 2023

Quarter Ending: 31st December 2023

• October 2023: TDS Deposit by 7th November 2023, TDS Return by 31st January 2024
• November 2023: TDS Deposit by 7th December 2023
• December 2023: TDS Deposit by 7th January 2023

Quarter Ending: 31st March 2024

• January 2024: TDS Deposit by 7th February 2024, TDS Return by 31st May 2024
• February 2024: TDS Deposit by 7th March 2024
• March 2024: TDS Deposit by 7th April 2024 (for govt. offices), 30th April 2024 (for others)

Late TDS return filings incur penalties per the Income Tax Act:

• Late Filing Fee (Sec 234E): Rs 200 per day until filing, not exceeding the TDS amount.
• Penalty (Sec 271H): Assessing Officer may impose Rs 10,000 to Rs 1,00,000 for late TDS returns, plus Section 234E late filing fee.
• Interest on Late Deposit (Sec 201(1A)): 1.5% monthly interest from deduction to deposit.

Interest Implications and Prosecution Provisions

Interest on Late Deposit of TDS

Under Section 201(1A), late TDS deposit incurs interest:

• Default Nature: If TDS is partly/fully undeducted or deducted but not deposited.
• Interest Rate: 1.5% monthly.
• Payment Period: From when tax is deductible to the deduction date, then to the deposit date.

Interest must be paid before TDS return filing.

Prosecution Provisions (Sec 276B)

Failure to remit TDS to the Central Government can result in:

• Penalty: Rigorous imprisonment (3 months to 7 years) and a fine.

This highlights TDS compliance's seriousness and statutory adherence's criticality.

Penalty Provisions during COVID-19 Lockdown

From 20th March to 30th June 2020, COVID-19 period penalties for TDS non-compliance were waived per Ordinance 2020. Otherwise, penalties for TDS shortfall may apply.

Penalty for Late Payment or Non-Payment of TCS

Non-compliance with TCS provisions has penalties:

• Interest Rate: 1% monthly or partial monthly on TCS amount.
• Interest Payment Period: From collectible date to payment date.

Timely TDS and TCS compliance avoids penalties and supports financial discipline and regulatory adherence.

By diligently fulfilling TDS obligations, businesses and individuals enhance the tax ecosystem and fiscal integrity.

Stay prepared with Pluto Money for more tax compliance and financial management insights.