Understanding Section 234E of Income Tax Act: A Comprehensive Guide
Section 234E of the Income Tax Act, 1961 deals with the levy of a fee for default in furnishing statements of tax deducted at source (TDS) or tax collected at source (TCS). The section was introduced by the Finance Act, 2012, and is applicable from 1st July 2012. In this article, we will discuss everything you need to know about Section 234E of the Income Tax Act, including its provisions, applicability, and consequences of non-compliance.
Provisions of Section 234E
According to Section 234E of the Income Tax Act, if a person fails to file the statement of TDS or TCS, he/she will be liable to pay a fee of Rs. 200/- per day until the default continues. The amount of the fee shall not exceed the amount of TDS or TCS for which the statement was required to be furnished. The total amount of the fee, however, cannot exceed the TDS or TCS amount.
Applicability of Section 234E
Section 234E applies to both TDS and TCS statements. Any person who is required to file a statement of TDS or TCS is liable to pay the fee under Section 234E. This includes individuals, HUFs, partnership firms, companies, and other entities.
Consequences of Non-Compliance
If a person fails to file the statement of TDS or TCS within the prescribed time limit, he/she will be liable to pay a fee under Section 234E. In addition to the fee, interest under Section 201(1A) will also be levied on the amount of TDS or TCS that was required to be deducted or collected. The interest will be calculated from the due date of filing the statement till the date of actual filing of the statement.
If a person fails to pay the fee, the assessing officer can initiate penalty proceedings under Section 271H of the Income Tax Act. The penalty amount can range from Rs. 10,000/- to Rs. 1,00,000/-. The penalty can also be levied in addition to the fee and interest.
Here are some additional points to consider when it comes to Section 234E of the Income Tax Act:
Waiver of fee: The Central Board of Direct Taxes (CBDT) has the power to waive or reduce the fee levied under Section 234E. However, the waiver or reduction can only be done on a case-by-case basis, and the decision will depend on the facts and circumstances of the case.
Late filing fees for Form 26AS: In addition to the TDS and TCS statements, Section 234E also applies to late filing fees for Form 26AS. If a taxpayer fails to file the Form 26AS within the prescribed time limit, he/she will be liable to pay a late filing fee of Rs. 200/- per day until the default continues.
TDS and TCS certificates: The TDS and TCS certificates should be issued to the deductee or the collector within the prescribed time limit. If there is a delay in issuing the certificate, the deductor or the collector will be liable to pay a fee of Rs. 100/- per day until the certificate is issued.
Consequences of non-filing of TDS and TCS statements: Non-filing of TDS and TCS statements can also attract penalties under Section 271C of the Income Tax Act. The penalty can be up to the amount of TDS or TCS that was required to be deducted or collected.
Revised TDS and TCS statements: If a taxpayer files a revised TDS or TCS statement, he/she must ensure that it is filed within the prescribed time limit. Failure to do so can attract a late filing fee under Section 234E.
Rectification of TDS and TCS statements: If a taxpayer wants to rectify any errors in the TDS or TCS statement, he/she can do so by filing a correction statement. The correction statement should be filed within the prescribed time limit to avoid any penalty or interest.
Digital signature: Taxpayers can file TDS and TCS statements electronically using a digital signature. The use of a digital signature ensures the authenticity of the statement and reduces the chances of errors.
Applicability of Section 234E to non-residents: Section 234E also applies to non-resident taxpayers who are required to deduct or collect TDS or TCS in India. However, the fee levied under the section cannot exceed the amount of TDS or TCS for which the statement was required to be furnished.
Conclusion
Section 234E of the Income Tax Act, 1961 aims to encourage timely filing of TDS and TCS statements. Non-compliance with the provisions of the section can lead to substantial financial implications for the taxpayer. Therefore, it is advisable to file the TDS or TCS statement within the prescribed time limit to avoid any penalty or interest.
Read more useful content:
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Frequently Asked Questions (FAQs)
- What is Section 234E of the Income Tax Act?
Section 234E of the Income Tax Act provides for the levy of a late filing fee for delayed submission of TDS and TCS statements.
2. Who is liable to pay the late filing fee under Section 234E?
The person responsible for filing the TDS or TCS statement, such as the deductor or the collector, is liable to pay the late filing fee under Section 234E.
3. How much is the late filing fee under Section 234E?
The late filing fee under Section 234E is Rs. 200/- per day until the default continues. However, the fee cannot exceed the amount of TDS or TCS for which the statement was required to be furnished.
4. When is the TDS or TCS statement required to be furnished under the Income Tax Act?
The TDS or TCS statement is required to be furnished on a quarterly basis, within the prescribed due dates.
5. Is there any penalty for non-filing of TDS or TCS statements?
Yes, non-filing of TDS or TCS statements can attract penalties under Section 271C of the Income Tax Act, which can be up to the amount of TDS or TCS that was required to be deducted or collected.
6. Can the late filing fee under Section 234E be waived or reduced?
The Central Board of Direct Taxes (CBDT) has the power to waive or reduce the late filing fee under Section 234E on a case-by-case basis, depending on the facts and circumstances of the case.
7. Is Section 234E applicable to non-residents?
Yes, Section 234E is applicable to non-residents who are required to deduct or collect TDS or TCS in India. However, the late filing fee cannot exceed the amount of TDS or TCS for which the statement was required to be furnished.
8. Can a taxpayer file a revised TDS or TCS statement?
Yes, a taxpayer can file a revised TDS or TCS statement if there are any errors in the original statement. However, the revised statement should be filed within the prescribed time limit to avoid any penalty or interest.
9. What is the consequence of non-issuance of TDS or TCS certificate?
Non-issuance of TDS or TCS certificate can attract a late filing fee of Rs. 100/- per day until the certificate is issued.
10. Can a taxpayer file TDS or TCS statements electronically?
Yes, taxpayers can file TDS or TCS statements electronically using a digital signature to ensure authenticity and reduce errors.
