One of my new clients has not filed Quarterly returns for last 2 years, has not deposited TDS from past 1 year.
It has paid entire amount to parties without deducting TDS i.e. Suppose
Rent payable pm is 20000.
They were paying him Rs 20,000 /- in full and expense is booked at 22000 and TDS at Rs 2000/- ( i.e. 10% on 20K)
So, My queries are as follows
1. Whether TDS interest has to be calculated considering it as a non deduction ?
2. Whether TDS interest for late depositing can be made ?? If so on what amount ??
3. Whether we need to calculate late fees u/s 234E for the past 2 years ?
4. Can i file the TDS returns for past period now??
As per my knowledge, the client has not recieved any notice/ demand for all these non-compliances.
Whether TDS interest has to be calculated considering it as a non deduction ?
Booked expenses 22000, paid only 20,000 that means TDS was deducted but at wrong Rate.
Check these things first:
- TDS was deductible
- TDS was deducted
- TDS deducted but not remitted to government
- TDS returns filed
If TDS not deducted and not mentioned by Auditor at Tax Audit time, forget the case. It will cost too much if you open the 2 year olod case and deduct and pay the TDS now. Late fee will be huge.
Start deducting now onwards. Its better to get expense disallowed u/s 40a(i), because cash flow is more in case of showing deduction for last 2 years now.
And if you deduct it now and pay for last 2 years than yes you have to pay intrest and late filing fee.
Whether TDS interest for late depositing can be made ?? If so on what amount ??
Intrest on Tax deducted but not deposit is 1.5% per month. Amount is TDS.
Whether we need to calculate late fees u/s 234E for the past 2 years ?
Can i file the TDS returns for past period now??
client has not received notice because he never declared the TDS to government.(Not deducted, Not remitted and no filings)
There are multiple things one has to look into this anonmity
a TDS deducted but failure to make payment.
B. After validly deducting, non furshing TDS returns
C. When the remittance can be made & relating penal provisions for interest and late furnishing of returns
D. Validity of furnishing the return.
a. Answering each one of the questions, TDS is expensed off or recovered from part is an accounting compliance not relevant with the Indian Income Tax Act, 1961. The accounting the TDS as expenses or paying owner after deduction is a matter of convienence and not a subject on compliance. Accounting treatment is irrelevant and tax obligation will remain the same as a defaulter.
b. There are two possibilities on TDS
i. TDS not deducted at all
ii TDS deducted but failed to remitt with the time prescribed.
C. Remittance can be made at any time, along with interest at the rate of 1.5% for month or part of month for which default in payment relates. Remember the levy of interest is mandatory and cannot be waived off.
d. E- returns can be filed, however subject to a levey of penalty of Rs. 200/- per day from end due date for furnishing the E-return till the date of furnishing the return. The maximum amount of levy under 234E cannot exceed the tax in question.
I beleive the explaination will suffice the question on compliance of law that is raised.
If further doubts, feel free to revert back, will be glad to provide further information.
Thank you Sandeep & Pulkit for your valuable advise. Wht if client is saying he cannot bear 200 per day of late fees for filing returns of previous years. Can we just file this year's returns and be safe ??
The wish of client will not work here. Income Tax Act defines the late fee and law can not be made applicable as per wish of client.
Whether client is willing to pay or not, Fees will be applicable if he files late return.
The levy of penalty U/s 234E is from Quarter 2 of FY 2012-13. Any prior filing will not attract late filing fees for sure. Only thing to take care is From July 202-13.
But some assessees and one of my client got notice for 2011-12. what to be done in that case?
Pulkit, any notices therein for the period before the enactment is in force is void-ab initio. Without an provision having power of creating a obligation by an enactment, any notice effecting it would not hold.
Two options, one do not pay the interest under 234E
Second, write a letter to department, stating the levy of penalty under section 234E is unconstitutional, as the enactment was made and its enforceability was from a subsequent date. As such the validity of notice is void.
i have same query my new client had recived bills from 1-4-12 but he has not paid tds till today in some of bills he has made payment after deducting tds but he had not deposited tds,he has recived tan no. in january -14, and it return of last year is also pending so how should i calculate tds, and if i m taking all the bills of 12-13 in which tds should be deduct in current accounting year then how much intrest will be charged
You Can make a tax planning and can avoid the most of 234E demand.