NON DEDUCTION OF TAX AT SOURCE

NON DEDUCTION OF TAX AT SOURCE

As an Accounts Manager are you worried about disallowance of expenses on account of Non-deduction of Tax at source??

Finance Act 2012 has provide some relief from penal consequences of non deduction of tax at source.

Prior to Finance Act, 2012

Any payment on which TDS is liable to deducted as per provisions section 192 to 196C of Income Tax Act,1961 and where TDS has not been deducted by assessee , will be disallowed under section 40(a)(ia) by Assessing officer at the time of assessment.

Further for non deduction of TDS assesse will be deemed to be assessee in default u/s 201(1) and will be liable for payment of interest u/s 201(1A) from the date on which tax was deductible to the date on which tax is actually paid and penalty as well u/s 221 of Income tax Act, 1961

After Finance Act, 2012

The above provisions have been amended vide Finance Act, 2012, amended provision(s) are as follows:

a) Sec 40(a)(ia) : Disallowance under section 40(a)(ia) will not be attracted if ;

b) Sec 201(1) :   Assessee will not be deemed as assessee-in-default and will  be liable for interest  from the date on which such tax was deductible to the date of furnishing of return of income by such payee if;

following conditions are satisfied:

i)    payment is made to resident only,

ii)   the resident recipient has furnished his return of income u/s 139,

iii)  the resident recipient has taken into account such payment as income in return of income,

iv)  the resident recipient has paid the tax due on the income declared in such return, and

v)   the payer furnishes a certificate to this effect from a chartered accountant in prescribed form.