Late TDS Return Filing Penalty not waived if PANs consequences.

Penalty for delay in filing of TDS return couldn't be levied if there was difficulty in obtaining PANs of deductees.

Where in view of change in IT system requiring furnishing details of PANs of all deductees for validation and uploading of e-TDS return, assessee delayed in filing its return in making efforts to obtain such details of deductees spreading throughout country, no penalty could be levied.

Source: Taxmann

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Maximum Penalty of Rs. 10000 on Delay in Filing of Income Tax Returns

Delay in filing Income Tax returns will now attract fine upto Rs 10,000

For income below Rs. 5 lakh, filing returns after July will attract a fine of Rs. 1,000, while for income above Rs. 5 lakh it will be Rs. 5,000, if it is filed after the due date but on or before December 31 of the assessment year.

The Budget has proposed imposing a fine for not filing income tax returns within the due date. For income below Rs. 5 lakh, filing returns after July will attract a fine of Rs. 1,000, while for income above Rs. 5 lakh it will be Rs. 5,000, if it is filed after the due date but on or before December 31 of the assessment year. It has also proposed a fee of Rs. 10,000 in any other case.

At a post-Budget event organised by the Institute of Chartered Accountants of India, Hasmukh Adhia, revenue secretary said that those who have an income of Rs. 5 lakh and above and file returns after July but till December will face a fine of Rs. 5,000. “This fine will be raised to Rs. 10,000 if the return is filled after December,” he said.

Time limit for filing revised return reduced

Under Section 139(5) of the Income Tax Act, an assessee can file revised return within two years from the end of the relevant fiscal year or before the completion of assessment by tax authorities, whichever is earlier. The Finance Bill proposes to reduce the time limit for filing such revised return to one year from the end of relevant fiscal year or before the completion of the assessment by tax authorities, whichever is earlier. This amendment shall be effective from fiscal year 2017-18.

A revised return can be filed if the assessee has filed the return within the due date. For filing the revised return, one has to enter the acknowledgement number and the date of filing of the original return in the revised form.

The Budget has also proposed to reduce the time limit for completion of assessment under Section 153 of the I-T Act. In assessment year 2018-19, it will be 18 months from the end of the assessment year. From assessment year 2019-20, it will be 12 months from the end of the assessment year. It has also reduced the time limit for completion of re-assessment. In respect of notices served under Section 148 of the I-T Act on or after April 1, 2019, the time limit for completion of assessment or re-assessment will be 12 months from the end of the financial year in which the notice is served.

Interest on refund

Under Section 244(A) of the I-T Act, an assessee is entitled to receive interest on refund because of excess payment of advance tax, tax deducted or collected at source. The assessee will, in addition to the refund amount, will receive simple interest on such refund at the rate of 1.5% for every month or part of a month from the date on which claim for refund is made in the returns or in case of an order passed in appeal, from the date on which the tax is paid to the date on which refund is granted.

Source: The Financial Express

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What are the Penalties under Income Tax Act ?

A complete list of Penalties under Income Tax Act, 1961

1. Penalty under Section 270A (Penalty for under reporting and misreporting of income):

If during the assessment proceedings, it is found that an assessee have under reported or misreported his income, then penalty u/s. 270A will be imposed on the Assessee. This is the harshest penalty that can be imposed by the department. The amount of penalty will be 50% of the tax payable on under reported income. However, under reported income is a result of misreporting, then the penalty amount is increased to 200% of the tax payable on under reported income.

2. Penalty under Section 271A - Default in maintaining or retaining books of account:

If during the assessment proceedings, it is found that an assessee have not maintained any books of accounts or other documents as required under Section 44AA, or the Assessing Officer finds that an assessee have not retained the books of accounts and other necessary documents for the minimum time period (say 6 years), then a penalty of Rs. 25,000 will be imposed.

3. Penalty under Section 271B - Default in Tax Audit:

If during the assessment proceedings, it is found that an assessee were supposed to get his accounts audited under section 44AB, but fails to do so, then penalty under section 271B of the Act will be imposed.

The amount of penalty will be a sum equal to 0.5% of gross sales, gross turn over or gross receipts, as the case may  be, but in any case this penalty cannot exceed Rs. 50,000.

4. Penalty under Section 271C - Default in deducting tax at source:

If during the assessment proceedings, it is found that an assessee has failed to deduct whole or any part of TDS as required by income tax laws, then the penalty will be a sum equivalent to the amount of tax not deducted.

5. Penalty under section 271CA - Default in collecting tax at source:

If during the assessment proceedings, it is found that an assessee has failed to collect whole or any part of TCS as required by income tax laws, then a penalty of a sum equivalent to the amount of tax not collected will be imposed. 

6. Penalty under Section 271D - Accepting loans in cash:

If during the assessment proceedings, it is found that an assessee has accepted a loan or deposit from any other person in cash for a sum exceeding Rs. 20,000 in a financial year, then a sum equal to the amount of loan accepted will be demanded from the assessee by way of penalty.

7. Penalty under Section 271E - Repayment of loans in cash:

If during the assessment proceedings, it is found that an assessee has repaid any loan or deposit to any other person in cash for a sum exceeding Rs. 20,000 in a financial year, then a sum equal to the amount of loan repaid will be demanded from the assessee by way of penalty.

8. Penalty under Section 271F - Non-filing of Income Tax Return:

If during the assessment proceedings, it is found that an assessee has filed his or her Return for a financial year by the end of the following financial year for which the Return has to be furnished, then a penalty of Rs. 5,000 will be imposed.

9. Penalty under section 271H - Non filing of TDS Return   

If during the assessment proceedings, it is found that an assessee has no furnished the TDS Returns even after expiry of 1 year from the due date of filing such returns or has furnished any incorrect information in the TDS Returns filed by him, then a penalty of a minimum of Rs. 10,000 and maximum of Rs. 1,00,000 will be imposed.

10. Penalty under Section 272B - Not having PAN or providing incorrect PAN:

If during the assessment proceedings, it is found that an assessee has not applied for a PAN even though it was required as per section 139A or where after obtaining a PAN, an assessee not intimated the same or provided incorrect PAN to any person under the provisions of the Income Tax Act, then a penalty of Rs. 10,000 will be imposed.

11. Penalty under Section 272BBB - Not having TAN or providing incorrect TAN:

If during the assessment proceedings, it is found that an assessee has not applied for a Tax deduction account number or a Tax collection account number as required by section 203A and Section 206CA respectively, or where after obtaining a TAN, an assessee provided incorrect TAN on the challans and certificates by him, then a penalty of Rs.10,000 will be imposed.

Reference :

1. Taxmann’s Income Tax Act, as amended by Finance Act, 2016, 60th Edition

2. A N Aiyar’s Indian Tax Laws - 2016, as amended by Finance Act, 2016, 53rd Edition 

3. Direct Taxes - Laws & Practice by Dr. Girish Ahuja & Dr. Ravi Gupta, as amended by Finance Act, 2016, 7th Edition

4. Kanga & Palkhivala’s - The Law and Practice of Income Tax - Volume II, Tenth Edition

Source: CA Club India

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Small Scale Business Owners, How to Maintain Books of Accounts in Fin. Year 2016-17 ?

MAINTAINING BOOKS OF ACCOUNTS

REQUIREMENT OF MAINTENANCE OF BOOKS OF ACCOUNTS

While you set up your business with grand fanfare, reaching your dream turnover was just the first milestone, you have already begun to bother about the profitability. Maintenance of financial records is actually a way to know the true and fair position of your business. In reality, it is much more. It is also a legal requirement.

Let us understand the requirement and the necessity for compulsory maintenance of accounts and audit as per Indian Income Tax Act in a simplified manner.

There are basically two categories

1. Specified Professionals
2. Non Specified Professionals

A. Specified Professionals include persons rendering services and having technical degrees in legal, medical, engineering, architectural/interior, accountancy, technical consultancy, information technology, film artists or any other person as notified by government. E.g.: lawyers, doctors, architects, interior designers, engineers, chartered accountants, film artists, consultants etc. Specified Professionals are non traders.

REQUIREMENT TO MAINTAIN BOOKS AND AUDIT

• As per Income Tax Act, a person carrying on any profession as mentioned above is compulsorily required to maintain complete record of books of accounts if his gross receipts from profession exceed Rs 1,50,000 per annum in all the three preceding years. 
• In case it is the first year of set up, you have to compulsorily maintain records if gross receipts are likely to exceed Rs150,000/-.
• In case the gross receipts of specified professionals is more than Rs 25 lakhs in the previous financial year, audit of financial records is compulsory as per Income Tax Act.

The Implication of these provisions is that if in any one year your income goes below the threshold limit of Rs 150,000/-, you are not required to maintain books of accounts.

B.  Non Specified Professionals include persons who render services to others but does not have a technical degree and are not covered in the above notified professionals and all the retailers and traders. In other words every business other than ones in specified category.

• As per Income Tax Act, a person carrying on any profession as mentioned above is compulsorily required to maintain complete record of books of accounts if his Income(profit) from business or profession exceed Rs 1,20,000 per annum or his sales/gross receipts exceed Rs 10 lakhs in any of the three preceding years. 
• In case it is the first year of set up, you have to compulsorily maintain records if income is likely to exceed Rs120,000 /- or his total sales/gross receipts likely to exceed Rs 10 lakhs
• In case the gross receipts/turnover/total sale of non-specified professionals is more than Rs 100 lakhs in the previous financial year, audit of financial records is compulsory as per Income Tax Act.

The Implication of these provisions is that if in any one year your sales/income goes below the threshold limit, you are still required to maintain books of accounts unless sales/income falls continuously for three years in a row in which case in the fourth year the provision shall not be applicable.

ANALYSIS BASED ON TURNOVER AND INCOME

1. Turnover below Rs 10 lakhs and Income below 120,000– Maintenance of Books not Compulsory
2. Turnover Exceeding Rs 10 lakhs but below Rs 100 lakhs and Income above 8% of Turnover: Maintenance of Books Compulsory/ Audit Not Required
3. Turnover Exceeding Rs 10 lakhs but below Rs 100 lakhs and Income below 8% of Turnover: Maintenance of Books Compulsory/ Audit Required
4. Turnover exceeding 100 Lakhs : Maintenance of Books Compulsory/ Audit Compulsory

Further:

• Company under Companies Act: Maintenance of Books Compulsory
• Charitable Institute/NOT FOR PROFIT ORG: Maintenance of Books Compulsory. Maintenance of Books Compulsory for charitable/ not for profit companies, for the simple reason that they claim they are making no profit.

What books of accounts are required to be maintained by “persons?”

For Specified Professionals: As per Rule 6F (2) of the Income Tax Rules, the following books of accounts and documents are required to be maintained:

1. Cash Book,
2. Journal, if the accounts are maintained as per mercantile system of accounting,
3. Ledger
4. Carbon Copies of bills, serially numbered and carbon copies or counterfoils of receipts
5. Original Bills for expenses exceeding Rs. 50 and payment vouchers for petty expenses 

Books or books of accounts can be maintained both manually as well as in electronic form also in accounting software’s. (Print out is not compulsory)

Persons engaged in medical profession are, in addition, required to maintain daily case register in the prescribed Performa (Form No. 3C) and inventory, as at the beginning and end of the year, of stock of drugs, medicines and other consumables accessories used for the purpose of profession.

For Non Specified Professionals:

No List is provided by the Govt department which means you are required to maintain every possible document in relation to business.

1. Cash book/ Ledger/ Journal
2. Inventory Records
3. Bank statements
4. Original Bills
5. Receipts/Counterfoils of sales
6. Vouchers for payments

Where the books of accounts should be kept: 

The current year’s books of accounts should be maintained and kept at the principal place of business or profession as per Rule 6F (3). There is no specific rule as to where the books of accounts of earlier years should be kept. In case you have branches, books of accounts can be either maintained at respective branches or at one place i.e. the registered office.

For how many years’ books of accounts are required to be preserved: 

Every year the record of books of accounts grows up and the cupboards filled up more and more. Every assessee wants to know for how many years he should keep the records of his books of accounts.

Rule 6F (5) provides that the books of accounts and other documents are to be kept for at least 6 years from the end of relevant assessment year. In simple words, record for one financial year will be kept for 7 years and after that you are not required to keep it as per law. However, if assessment proceedings for a previous year are re-opened by the Income Tax department, its books have to be maintained till that is not completed and closed.

Consequences for failure to maintain books of accounts: 

Failure to maintain books or documents invites a penalty of Rs 25,000/- and failure to get the accounts audited and furnish the tax audit report  invites a penalty of 0.5% of total sales, turnover or gross receipts, or Rs. 1,00,000 whichever is less.

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Penalty or Interest causes by Late Filing of Income Tax Return - Asstt. Year 2016-17

We all are well known the importance of Income Tax Filing.  Though this some tax payee neglect to file income tax return in due date.  Therefore, all the Tax Return Filers i.e. Tax Consultant, Business Men and special Salaried Employee (Taxpayer) who are filed non-audit and non-corporate Assessee's Income Tax Return by extended due date  i.e. 05th August, 2016 for Asstt. Year 2016-17. The details about Late filing and due date of Income Tax Return are as under:

Due date of filing of income tax return for Assessment Year 2016-17 :

• The due-date for filing of returns for non-audit & non-corporate assessee’s is 31st July of the assessment year 2016-17 which extended to 05th August, 2016.
• In case of an assessee, being a partner of a firm liable to audit u/s. 44AB, the applicable due-date shall be 30th September of the assessment year (The said limits are as per the provisions of section 139(1) of the Act).
• In the case of an assessee liable to submit a report u/s. 92E (Transfer Pricing Report) of the Act, the applicable due-date is 30th November of the assessment year.

Income Heads covered under due date 31st July, 2015

• Salary, Pension,
• Income from other source like interest income,
• Income from capital gain, 
• Income from house property and 
• Income from person owning small business and not liable to get their accounts audited are covered.

Major Effects of Non Filing of Income Tax Return by Due Date for Fin.Year 2013-14, Asstt. Year 2014-15 and onwards ?

• Losses can not be carry forward.
• Interest u/s. 234A will be charges @ 1% PM applicable.
• Income Tax Return e-Filing is Mandatory, if Annual Taxable Income is not less than 5 Lakhs.
• Income Tax Return can not be revised at any cost if filied not in time.

What happen next when Taxpayee not file Income Tax Return in Due Date ?

• There is no any penalty on late filing of Income Tax Return.

What says Income Tax section 271F regarding late filing of Return ?

If a person who is required to furnish a return of his income, as required under sub-section (1) of section 139 or by the provisos to that sub-section, fails to furnish such return before the end of the relevant assessment year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of five thousand rupees

so this section says end of relevant assessment year, for previous year 2013-14, assessment year is 2014-15 and it will ends on 31.03.2015 and onwards, means there is no penalty for late filing of income tax return up to 31.03.2015 and onward and after that assessing officer(AO) can impose a penalty of Rs. 5000, and that is also his (AO) power which he may or may not exercise after giving due hearing to the assessee.

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Common Mistakes That Could Attract 200% Income Tax Penalty

Any concealment of income or under-reporting of income to evade tax can cost you dearly. The tracking mechanism of the income tax department has improved significantly in recent years. Now, you have to report your permanent account number (PAN) for all major transactions. Financial institutions with which you deal with like your bank, mutual fund company or credit card company feed the tax department with information regarding your transactions. The penalty in case of concealment and under-reporting of income can be as high as 200 per cent.

"If you under-report income or don't report some of your income, you may receive notice from the tax department questioning the reason behind it. A penalty will be charged as per the tax laws," says Preeti Khurana, chief editor of Cleartax portal.

According to tax experts, these are some of the income people generally don't declare to the tax authorities.

Gains or return on investment made in the name of spouse or minor child: Many people invest in the name their child or non-working spouse. Gifting money to certain relatives including spouse and minor child is exempt from tax. But if that is invested, the return from the investment has to be clubbed with the income of the person giving the gift (the giftor).

Suppose you have bought a property in the name of your wife and if she had not paid any money towards the purchase of the house, the rental income will be clubbed with your income and will be taxed as per your slab.

Interest income: Interest earned on investments such as fixed deposits, bonds etc are taxable and you have to report it in your tax return. The exemption available is only in case of interest earned on savings account. Interest earned up to Rs 10,000 is exempt from income tax but even in this case you have to show the income in your income tax return and claim the exemption.

Not reporting income from other sources: Suppose you worked as a freelancer for some part of the year and took up a job after that. Your employer will deduct TDS from your salary but you have to also report the income you as a freelancer in your tax return.

Received gifts: If you have received gifts in terms of cash and movable or immovable property worth more than Rs 50,000 other than from your relatives, it is taxable in your hands. Gifts received on the occasion of marriage are exempted from this rule.

Not reporting foreign assets and income: This is considered a serious offence and could attract higher penalty. Suppose you work in a multinational company whose shares are listed abroad. If you have received shares under employee compensation scheme, you will have to report it in your tax return.

Source: NDTV Profit

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Statutory provisions attracted on failure to deduct and deposit Tax.

Where the employer has failed to deduct tax or when short deduction of tax has been done, following statutory provisions are attracted:-

Charging of interest u/s 201(1A) – The deductor is treated to be ‘assessee in default’ in respect of the short deduction/non deduction of tax. Under Section 201(1A) he is liable to pay simple interest @ 1% for every month or part of a month on the amount of tax in arrear from the date on which such tax was deductible to the date on which such tax is actually deducted. Further such interest shall be paid before furnishing the quarterly statement of each quarter.  Charging of interest u/s 201(1A) is mandatory and there is no provision for its waiver.

Procedure for interest calculation

The calculation of interest is to be done as per Rule 119A and is summarized below:

• Where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be full month and interest shall be so calculated.
• The amount of tax in respect of which interest is to be calculated is to be rounded off to nearest multiple of Rs. 100 ignoring any fraction of Rs. 100.

Penalty u/s 221 - The assessee in default is liable to imposition of penalty where the assessing officer is satisfied that the defaulter has failed to deduct tax as required without good and sufficient reason. The quantum of penalty is not to exceed the amount of tax in arrear. Besides, a reasonable opportunity of being heard is to be given to the assessee.

Penalty u/s 271C – A penalty equivalent to the amount of tax the deductor has failed to deduct, is leviable u/s 271C. Such penalty is however only leviable by a Joint Commissioner of Income Tax.

Where the employee has deducted the tax at source but failed to deposit wholly or partly, the tax so deducted in government account, the following statutory provisions are attracted:-

• Interest u/s 201(1A)- The deductor is treated as an assessee in default and interest u/s 201(1A) is leviable @1.5% for every month or part of the nonth on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Further, the tax along with the simple interest u/s 201(1A) becomes a charge upon all the assets of the deductor.
• Penalty u/s 221- Penalty to the extent of tax not deposited is leviable by the A.O. 
• Prosecution proceedings u/s 276 B- Where the deductor has failed to deposit tax deducted at source, in govt. a/c without a reasonable cause then he is punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine.

Source: www.tdsman.com

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No penalty on non-deduction of tax if assessee bona-fide believed that no tax shall be deducted

Gifts were distributed without deducting tax to employees on a bona fide believe that such gifts shall not form part of salary. Thus, such distribution shall not attract penalty.   image1

Case: Commissioner of Income Tax vs. Indian Petrochemicals Corporation Ltd.

Facts:

The assessee being a Public Sector Unit filed its return of income. The cas was under scrutiny. The AO noticed that the assessee distributed gifts coupons to its employees. The said gifts were not disclosd in the return and thus, no deduction of tax on the same.

The AO passes an order under section 201 (1). Penalty under section 271(1)(c) was also imposed on the assessee.

The Commissioner (Appeals) rejected the appeal of the assessee.

Aggrieved by the order, assessee appealed to the tribunal. The Tribunal deleted the penalty levied upon the assessee.

Revenue appealed to the High Court.

Held:

The Revenue argued that the gift coupons given to employees were for performance of their duty and not as mementos. Therefore, they were classified as perquisite in the hands of the employees.

While the assessee submitted that being a large scale Public Sector Undertaking pays a huge amount of tax in terms of deduction from salary of its employees. Even the past record of the company does not show any default in payment of TDS.

The assessee bona-fide believed that the gifts coupons distributed shall not form part of salaries. It was under an impression that gift coupons, being in the nature of mementos to commemorate conferment of awards, were not in the nature of payment of salary.

Since the assessee was under a genuine and bona fide belief that it was not under any obligation to deduct tax at source, penalty u/s.271C shall not be levied as reasonable cause was shown for not deducting tax at source. The liability to penalty u/s.271C shall be imposed only on the person who does not have good and sufficient reason for not deducting tax at source.

Thus, no penalty on non-deduction of tax if assessee bona-fide believed that no tax shall be deducted.

Source: Tax Mantra (Alok Patnia)

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Late Filing Fees and Penalty for TDS/TCS Statements for Asstt. Year 2015-16

Before understanding the penalty provisions for failure to furnish the statement of Tax Deducted at Source or statement of Tax Collected as Source (i.e. commonly known as TDS/TCS return) we shall first have a look at the few basic duties of a person liable to deduct/collect tax at source and due dates for filing of TDS/TCS return.

Duties of the person liable to deduct/collect tax at source

• He shall obtain Tax Deduction Account Number or Tax Collection Account Number (as the case may be) and quote the same in all the documents pertaining to TDS/TCS.
• He shall deduct/collect the tax at source at the applicable rate.
• He shall pay the tax deducted/collected by him to the credit of the Government.
• He shall file the periodic TDS/TCS statements, i.e., TDS/TCS return.
• He shall issue the TDS/TCS certificate in respect of tax deducted/collected by him.

Due Dates for filing of TDS/TCS return

The due dates for filing of statement of TDS i.e. TDS return for different quarters are as follows:

Now we will understand the provisions relating to penalty for not furnishing the TDS/TCS statement i.e. TDS/TCS return. 

Basic provisions

A person who fails to file the TDS/TCS return or does not file the TDS/TCS return by the due dates prescribed in this regard has to pay late filing fees as provided under section 234E and apart from late filing fees he shall be liable to pay penalty under section 271H.  In this part you can gain knowledge about the provisions of section 234E and section 271H.

Late filing fees under section 234E

As per section 234E, where a person fails to file the TDS/TCS return on or before the due date prescribed in this regard, then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day during which the failure continues. The amount of late fees shall not exceed the amount of TDS. TDS/TCS return cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. It should be noted that Rs. 200 per day is not penalty but it is a late filing fee.

Read about Penalty under section 271H (Click Here)

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Relaxation in Penalty for non-payment/short-payment of service tax provision in Finance Act

The Budget 2015 has the intention of the government to align the penal provisions as contained in the Excise and Service tax laws. The penalty section 11AC of the Excise has been substituted and similar changes have been made in the section 76 and 78 of the Finance Act.

Erstwhile section 76 (Penalty for failure to pay service tax) provides:

Any person, liable to pay service tax fails to pay such tax, shall pay, in addition to such tax and the interest on that tax, a penalty which shall not be less than

• one hundred rupees for every day during which such failure continues or
• at the rate of one percent of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax:

Provided that the total amount of the penalty payable in terms of this section shall not exceed fifty per cent of service tax payable.

Amendment:

The amendment in section 76, seeks to simplify the computation of the amount of penalty payable under this section. The substituted section simplifies the computation of penalty under this section and restricts the penalty to 10% of the amount of service tax payable. Not only this, the amended section also seeks to provide additional benefit that no penalty shall be leviable, if service tax and interest is paid within 30 days from the date of service of show cause notice.

Note: After this amendment, the assessee can get waiver from penalty imposed under section 76 for non-payment/short-payment of service tax. Thus, there is relaxation in penalty for non-payment/short-payment of service tax provision in Finance Act.

Amended Section 76:

(1) Where service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, for any reason, other than the reason of fraud or collusion or willful misstatement or suppression of facts or contravention of any of the provisions-

the person who has been served notice under section 73(1) shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty not exceeding ten per cent of the amount of such service tax:

Provided that where such service tax and interest is paid within a period of thirty days of–

• the date of service of notice under sub-section (1) of section 73, no penalty shall be payable;
• the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent of the penalty imposed in that order, only if such reduced penalty is also paid within such period.

(2) Where the Commissioner (Appeals), the Appellate Tribunal or, the court, as the case may be, modifies the service tax determined under section 73(2)-

the amount of penalty payable thereon, shall also stand modified accordingly, and the benefit of reduced penalty under the proviso to sub-section (1) shall be available if such service tax, interest and reduced penalty so payable, is paid within a period of thirty days from the date of receipt of the order by which such modification is made.”

Source: www.taxmantra.com

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Charges collected for late filing of TDS return is a fees and not a tax

The fee sought to be levied under section 234E for late filing of TDS return is not a tax that is sought to be levied on the deductor. If the section does not empower the AO to condone the delay for furnishing of TDS return, then the said section shall not stand onerous.

Facts of the case:

Petitioner, a practicing Chartered Accountant, challenged the constitutional validity of section 234E.

Section 234E – Levy of Fees:

Failure to submit e-TDS Statement on time will result in fees on the deductor.

If you delay or forget to file your e-TDS Statement, fees of Rs. 200 per day will be levied on the deductor, as long as TDS Statement is not filed.

The levied amount of fee is not supposed to exceed the TDS deductibles.

Prior to filing of TDS Statement such fee should be paid and it should be reflected in the TDS Statement.

The petitioner argued that legislature had categorically termed the levy under section 234E of the Act as a “fee”. It necessarily could be levied only in the event the Government was providing any service. In the absence thereof, the said section seeks to collect tax in the guise of a fee.

He further submitted that the provisions of section 234E were extremely onerous as the AO was not vested with any power to condone the delay in filing the TDS return and there was also no provision of appeal against order of AO.

It was held that:

The High Court held that the the Income Tax Department is under obligation to process the income tax returns within the specified period. If the information of TDS is not furnished by the deductor, the department cannot accurately process the return.

If the income tax returns having refund claims were not processed in a timely manner, it would result in delay in issuing refunds or raising of infructuous demands. Late payment of refund also affects the government financially as the Government has to pay interest for delay in granting the refunds.

To avoid such interest payment, furnishing of TDS returns within the prescribed time frame is necessary. The legislature viewed that the TDS return was not furnished within the due date. This led to an additional work burden upon the Department due to the fault of the deductor.  To compensate for the additional work burdened upon the Department, a fee was sought to be levied under section 234E. Thus, Section 234E is a fee which is charged for the extra service which the Department has to provide due to the late filing of the TDS statements.

Even if right of appeal is not there in the statute, the aggrieved person could anytime approach to the Court under Article 226/ 227 of the Constitution of India, as the case may be. Therefore, the Court held that merely because no remedy of appeal was provided for, the provisions of section 234E were onerous.

Source: Mr. Alok Patnia, founder of Taxmantra.com

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CPC (TDS) Demands for Payment of Outstanding Late Filing Fee u/s. 234E.

Recently CPD (TDS) has issued Demand / Follow-ups notice to Taxpayers for payments of outstanding Late Filing Fee u/s. 234E which is as under: 

As per the records of CPC (TDS), there is an outstanding default of Rs. 0.00 on account of Late filing fee Levy u/s 234E, for the TANs associated with your PAN. The TAN-wise summary of the default is attached for your reference.

Section 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day's delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). The provision for Levy of Late filing fee was introduced to improve Filing Compliance and to avoid subsequent inconvenience to the taxpayers due to inordinate delays in availability of tax credits in their 26AS Statements. 

This assumes further significance in view of the decision of the Hon�ble High Court of Bombay, dated February 6 2015, upholding the validity of the Levy for Late Filing u/s 234E. The court has observed the following in its decision in the case of Rashmikant Kundalia vs. UOI:

Immediate Attention:

• The late filing of TDS returns by the deductor causes inconvenience to everyone and s. 234E levies a fee to regularize the said late filing.
• The fee is not in the guise of a tax nor is it onerous.
• The levy is constitutionally valid.

CPC (TDS), in its endeavor to strengthen TDS Compliance, is reaching out to you to reiterate the essence of timely filing of Quarterly TDS Statements. Section 200(3) of the Income Tax Act, 1961 read with Rule 31A of the Income Tax Rules, 1962, prescribes the following due dates for filing of TDS Statements:

Where the TDS Statements are not filed within the due date, CPC (TDS) sends Intimations u/s 200A of the Act that includes Levy under section 234E. Your attention is hereby drawn towards the provisions of section 234E of the Act (Levy for Late filing of TDS Statement), which reads as follows:

• Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.
• The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.
• The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.
• The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.

Action to be taken by the TANs associated with your PAN, in case of levy intimated u/s 234E :

• Please download the Justification Report from our portal TRACES to view your latest outstanding demand. Please click here for assistance on downloading the Justification Report.
• Use Challan ITNS 281 to pay the Levy with your relevant Banker, if there are no challans available for consumption.
• Please use the Online Corrections facility on TRACES to submit corrections, to payoff the demand. To avail the facility, please Login to TRACES and navigate to Defaults tab to locate Request for Correction from the drop-down list. You can refer to our e-tutorials for necessary help.
• Alternatively, you may also download the Conso File from our portal provided there are no Short Payment Defaults.
• Prepare a Correction Statement using the latest Return Preparation Utility (RPU) and File Validation Utility (FVU).
• Submit the Correction Statement at TIN Facilitation Centre.

For any assistance, you can write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

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Fine for Late filing of TDS Return u/s. 234E is constitutionally valid.

We would like to share a Judgement regarding Fine for Late filing of TDS Return u/s. 234E of Bombay High Court which is recently issued in the case Rashmikant Kundalia Vs. UOI, Writ Petition No. 771 of 2014.  In this wirt Petition, Petitioners have challenged the constitutional validity of section 234E of the Income Tax Act, 1961. Section 234E seeks to levy a fee of Rs.200/- per day (subject to certain other conditions as set out therein) inter alia on a person who deducts Tax at Source (TDS) and then fails to deliver or cause to be delivered the TDS return/statements to the authorities within the prescribed period.

Petitioner No.1 is a practising Chartered Accountant who has received several notices under section 200A of the Act that were served by the Revenue on his various clients. According to the Petitioners, section 234E is ultra vires and violative of Article 14 of the Constitution of India and therefore deserves to be struck down by this Court. Consequently, even the notices issued by the Revenue ought to be set aside.

Download Judgment Copy of Bombay High Court.

Source: www.tdsman.com

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CBDT Clarification about Interest u/s. 234A on Self Assessment Tax Paid before Due Date.

Recently CBDT clarifies that No Sec. 234A interest on self-assessment tax paid before due date of filing of return on 10th Feb., 2015 by Draft Circular No. 2/2015 which is as under :

SECTION 234A OF THE INCOME-TAX ACT, 1961 - INTEREST FOR DEFAULTS IN FURNISHING RETURN OF INCOME - CHARGEABILITY OF INTEREST UNDER SECTION 264A ON SELF-ASSESSMENT TAX PAID BEFORE DUE DATE OF FILING OF RETURN OF INCOME

DRAFT CIRCULAR NO. 2/2015 [F.NO.385/03/2015-IT(B), DATED 10-2-2015

Interest under section 234A of the Income-tax Act, 1961 (hereinafter the Act) is charged in case of default in furnishing return of income by an assessee. The interest is charged at the specified rate on the amount of tax payable on the total income, as reduced by the amount of advance tax, TDS/TCS, any relief of tax allowed under section 90 and section 90A, any deduction allowed under section 91 and any tax credit allowed in accordance with the provisions of section 115JAA and section 115JD of the Act. Since self-assessment tax is not mentioned as a component of tax to be reduced from the amount on which interest under section 234A of the Act is chargeable, interest is being charged on the amount of self-assessment tax paid by the assessee even before the due date of filing of return.

2. It has been held by the Hon'ble Supreme Court in the case of CIT v. Prannoy Roy, 309 ITR 231 (2009) that the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the income-tax return for the relevant assessment year. Accordingly, the present practice of charging interest under section 234A of the Act on self-assessment tax paid before the due date of filing return was reviewed by CBDT.

3. The Board has decided that no interest under section 234A of the Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing of return of income.

4. This Circular may be brought to the notice of all officers for compliance.

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Due Date and Interest on Late Payment of TDS for January 2015 is 7th February, 2015

Due date for deposit of Tax deducted/collected for the month of January, 2015​ is 7th February 2015.  In case the assessee deposits the TDS Payment after the due date of payment of the tax deducted at source, he shall be liable to pay interest @1.5% for every month or every part of the month during which the amount is not deposited with the government.

Earlier, the Interest liable to be paid was 1% but this has been increased to 1.5% pm with a view to discourage the practice of delaying the deposit of tax after deduction.

Interest @ 1.5% is liable to be paid from the date on which the TDS was deducted and not from the date the TDS was due.

For example: TDS was deducted on 25th June and the due date for TDS Payment was 7th July. The assessee fails to deposit the TDS by 7th July. In such a case, the Interest would be calculated from 25th June and not from 7th June.

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Late Filing Fees and Penalty for Failure to Furnish/Delay in Furnishing the TDS/TCS Statements.

Recently Finance (No.2) Act, 2014 has been amended by CBDT and as per this amendment the details of late filing fees and penalty for failure to furnish / delay in furnishing the TDS/TCS Statements is as under:

Before understanding the penalty provisions for failure to furnish the statement of Tax Deducted at Source or statement of Tax Collected as Source (i.e. commonly known as TDS/TCS return) we shall first have a look at the few basic duties of a person liable to deduct/collect tax at source and due dates for filing of TDS/TCS return.
 

Duties of the person liable to deduct/collect tax at source

• He shall obtain Tax Deduction Account Number or Tax Collection Account Number (as the case may be) and quote the same in all the documents pertaining to TDS/TCS.
• He shall deduct/collect the tax at source at the applicable rate.
• He shall pay the tax deducted/collected by him to the credit of the Government.
• He shall file the periodic TDS/TCS statements, i.e., TDS/TCS return.
• He shall issue the TDS/TCS certificate in respect of tax deducted/collected by him.

Due Dates for filing of TDS/TCS return
 

The due dates for filing of statement of TDS i.e. TDS return for different quarters are as follows:

Date of ending of the quarter of the financial year	Due date for Government deductor	Due date for any other deductor
30th June	31st July of the financial year	15th July of the financial year
30th September	31st October of the financial year	15th October of the financial year
31st December	31st January of the financial year	15th January of the financial year
31st March	15th May of the financial year immediately following the financial year in which deduction is made	15th May of the financial year immediately following the financial year in which deduction is made.

Now we will understand the provisions relating to penalty for not furnishing the TDS/TCS statement i.e. TDS/TCS return.

Basic Provision

A person who fails to file the TDS/TCS return or does not file the TDS/TCS return by the due dates prescribed in this regard has to pay late filing fees as provided under section 234E and apart from late filing fees he shall be liable to pay penalty under section 271H. In this part you can gain knowledge about the provisions of section 234E and section 271H.

Late filing fees under section 234E

As per section 234E, where a person fails to file the TDS/TCS return on or before the due date prescribed in this regard, then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day during which the failure continues. The amount of late fees shall not exceed the amount of TDS.

TDS/TCS return cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. It should be noted that Rs. 200 per day is not penalty but it is a late filing fee.

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Interest u/s. 234B can't be charged on some Dis-allownaces by A.O.

Assessing Officer has not any right to charge interest u/s. 234B on non deduction of TDS u/s. 194C, 194A, 194H, 194I, 194J and 195.

The dis-allowance on account of non deduction of tax at source is now very common form of dis-allowance by the assessing officer. Such dis-allowance is done u/s 40(a)(i) and 40(a)(ia)  of the Income Tax Act. Very common dis-allowances for non deductions of tax at source  are as under :

• Non deduction on contractual works (Section 194C )
• Non deduction of tax on interest (194A)
• Non deduction of tax on commission (194H)
• Non deduction of tax on rent  (194 I)
• Non deduction of tax on professional and technical fee (194J)
• Non deduction of tax on payments to Non Residents.(195)

The Assessing Officer (A.O.) computes on increased total income and charges interest u/s 234B. Thus, interest u/s 234B is charged also on the tax on dis-allowance u/s 40(a)(i) which is included in total income.

Source: www.taxbymanish.blogspot.com

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Penalty for late filing of the e-forms under Companies Act, 2013

Beware friends!! Don’t delay the filing of e-forms under companies act by more than 270 days from the last date of filing the form!!

Let’s start with discussing the charging section of penalties.

Section 403:

Brief: If a assessee delays filing of e-form by more than 270 days from the time period granted for filing of the respective e-form, then penalty as given in the concerned section will be imposed.

For eg: If the resolution to be attached in MGT-14 is passed on 21.01.2015, then normal time to file the form is 30 days. Penalty will be imposed if the person doesn’t file the form within 300 days from 21.01.2015 or if the form is not filed within 270 days from 20.02.2015.

Bare law:

Sec 403. (1) Any document, required to be submitted, filed, registered or recorded, or any fact or information required or authorized to be registered under this Act, shall be submitted, filed, registered or recorded within the time specified in the relevant provision on payment of such fee as may be prescribed:
             Provided that any document, fact or information may be submitted, filed, registered or recorded, after the time specified in relevant provision for such submission, filing, registering or recording, within a period of two hundred and seventy days from the date by which it should have been submitted, filed, registered or recorded, as the case may be, on payment of such additional fee as may be prescribed:
             Provided further that any such document, fact or information may, without prejudice to any other legal action or liability under the Act, be also submitted, filed, registered or recorded, after the first time specified in first proviso on payment of fee and additional fee specified under this section.
         (2) Where a company fails or commits any default to submit, file, register or record any document, fact or information under sub-section (1) before the expiry of the period specified in the first proviso to that sub-section with additional fee, the company and the officers of the company who are in default, shall, without prejudice to the liability for payment of fee and additional fee, be liable for the penalty or punishment provided under this Act for such failure or default.

Now, let’s discuss the penalty.

S.No.	Particulars	Section	Penalty
1.	Commencement of Business	Section 11(2)	Company – upto Rs. 5,000/- Officer – upto Rs. 1,000/- per day
2.	Return of Allotment	Section 39(5)	Company & officer in default: Rs. 1000/- per day or 1 lakh, whichever is less.
3.	Intimate alteration of Capital	Section 64(2)	Company & officer in default: Rs. 1000/- per day or 5 lakh, whichever is less.
4.	Deposits	Section 66(11)	Officer will be liable u/s 447 and company will have to pay from Rs. 5 lakh to 25 lakh.
5.	Charges	Section 86	Company: Rs. 1 lakh to 10 lakh Officer: Imprisonment upto 6 months and/or fine of Rs. 25000/- to 1 lakh
6.	Annual Return	Section 92 (5)	Company: Rs. 50,000/- to 5,00,000/- Officer: Rs.  50,000/- to 5,00,000/- and/or imprisonment of 6 months
7.	Filing of resolutions	Section 117 (2)	Company: Rs. 5 Lakh to 25 Lakh. Officer: Rs. 1 Lakh to 5 Lakh.
8.	Retirement of Auditor	Section 140(3)	Auditor: Rs. 50,000/- to Rs. 5 Lakh
9.	Intimation of DIN	Section 157 (2)	Company: Rs. 25,000/- to Rs. 1 lakh Officer: Rs.  25,000/- to Rs. 1 lakh
10.	Disclosure of Interest	Section 184 (4)	Director: Rs. 50,000/- to Rs. 1 lakh and/or imprisonment upto 1 year.

 This isn’t the complete list, but for sure to make us aware of the stringent provisions of Companies Act, 2013.

Source: www.caclubindia.com

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