Section 234E of Income Tax Act| Explained

The government of India introduced Section 234E of Income Tax act by the Finance Act, 2012. Section 234E of Income Tax act applies to late filing of the TDS Statement. According to the guidelines of Section 234E of Income Tax act, a delay in the filing of TDS statements by the deductor will lead to penalties or late payment fee. This late filing fee for delay in the submission of TDS/TCS statements that are filed quarterly, is paid to the Income tax Department. In this blog, we will look through Section 234E of Income Tax act.

Section 234E: An overview

Section 234E of Income Tax act is not applicable in certain cases like when the payment of TDS is made beyond the stipulated time limit which has been specified for TDS payment under Section 200(3). According to Section 200(3) of the income tax act, the returns that are to be filed quarterly after the payment of TDS return within the stipulated time.

Process of TDS Deduction

Any individual who is liable to either deduct or collect the TDS has to comply with the basic duties that are listed below:

1. The Deductor will have to mention the TAN (Tax Deduction Account Number) or the TCS (Tax Collection Account Number/ Tax Collected at Source) according to the requirements on the necessary documents.
2. The deductor must submit the periodic TCS returns or TDS returns.
3. The deductor should also collect or deduct the tax that is applicable according to the tax rates and then submit the payment to the IT department.
4. The deductor is also responsible for issuing TDS/TCS certificates for the tax that is collected by him/her.

Due Date to file TDS/TCS return

The due dates to file the TCS/TDS returns for various quarters are listed below:

For Quarter ending on 31/12/2019: The due date for filing the TDS statements for both the government and the other deductor is 31/01/2020 and the due date for filing the TCS statements is 15/01/2020.

For Quarter ending on 31/03/2020: The due date for filing the TDS statements for both the government and the other deductor is 31/05/2020 and the due date for filing the TCS statements is 15/05/2020.

Basic Provisions

If any individual is unable to file the TDS/TCS return statements or is unable to file the TDS/TCS returns within the stipulated time, then he will have to pay the late fee as per Section 234E of the income tax act and the individual will also have to pay a penalty as per Section 271H.

Penalty of late TDS/TCS Return Filing

According to the provisions of Section 234E of the income tax act, a late fee of Rs. 200 per day will be levied on the individual and will have to be paid to the IT department for the late filing of TDS/TCS return. This fine will be levied each day till the amount of fine is equal to the amount of TDS to be deducted. It is necessary to pay the late fee before filing the TDS/TCS returns.

Penalty when no TDS/TCS return are filed

 If an individual is unable to file the TDS/TCS return within the stipulated time period, then he will be penalised and the maximum penalty that can be levied on an individual is Rs. 1 lakh.  The taxpayer must pay the penalty amount along with the late fee. The taxpayer will not be levied with any penalties in the conditions listed below:

1. The taxpayer gives a reasonable cause for not filing the TDS/TCS return.
2. The TDS has been credited to the Indian government.
3. The TDS/TCS is filed within one year from the stipulated due date.
4. The taxpayer is granted a waiver or reduction in penalties by the Commissioner of Income Tax department.

Computation Fees

Under Section 200A of the income tax act, the processing of TDS is done to decide if the paid amount is refundable or not to the deductor in addition to the refund payment process in case of an excess payment by the deductor. The provisions of Section 200A were amended by the FInance Act, 2015 to allow the computation of the fee that is payable under Section 243E of the income tax act while processing the TDS statements.

Conclusion

In this blog, we discussed Section 234E of the income tax act and the process of TDS Deduction. The basic provisions and the due dates and penalties for filing the TDS/TCS returns.