PROSECUTION AND INTEREST ON LATE DEPOSIT OF TDS:
TDS under income tax is main source of tax collection by the Government. However many times the tax Deductors ,after deducting TDS from specified payments, are deliberately not depositing the taxes so deducted in Government account and continue to deploy the funds so retained for business purposes or for personal use .CBDT is stressing on compliance of the due date of deposit of TDS by the Deductor.€
Interest on late deposit of TDS is applicable @ 1.5 % per month or part thereof .The period for delay is taken from date of deduction to date of deposit ,so in specific cases a delay of one day may lead to pay Interest @ 3 % .Yes , it is true.
Interest on Late deposit of TDS @ 3 % for delay of one Day!€
Suppose:€
TDS deducted on 01.08.13€
In this case Due date will be 07.09.13€
If we deposit tax on 08.09.13 one day delay .€
Interest will be applicable for 2 months from 01.08.13
(date of deduction ) to 08.09.13(date of deposit) for two
months @1.5 % p.m=3%
CBDT has released following press release in this regards:
It has come to the notice of Income Tax Department that many times the tax deductors,after deducting TDS from specified payments, are deliberately not depositing the taxes so deducted in Government account and continue to deploy the funds so retained for business purposes or for personal use. Such retention of Government dues beyond the due date is an offence liable for prosecution under Section 276B of the Income Tax Act, 1961. The defaulter, if convicted, can be sentenced to Rigorous Imprisonment (RI) for a term which can extend up to seven years.
The TDS units of Income Tax Department have been taking up prosecution proceedings in suitable cases where TDS has been retained beyond the due date. The Central Board of Direct Taxes has partly modified existing guidelines for identification of cases for launching prosecution. As per the revised guidelines, the criterion of minimum retention period of 12 months has been dispensed with.
For the benefit of public at large, it is now clarified that defaulters, who have retained the TDS deducted and failed to deposit the same in Government account within due date, shall be liable for prosecution, irrespective of the period of retention.
However, the offence u/s 276B of the Income Tax Act can be compounded by Chief
Commissioner having jurisdiction on the case, either before or after the launching of
prosecution proceedings. In the recent past, several defaulters have submitted petitions for compounding of such offences and compounding orders have also been passed by the Competent Authority in suitable cases.€
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