Regarding TDS

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    KAVITA CHABRA New Member

    Please solve the following case:-

    An Automobile company not deducted tds on Audit Fee Charged by CA and Paid full amount of bill so which entry will be pass to settled the amount of TDS Receivable from CA Firm.
    Is there any scope if any ABC Company forgot to deduct TDS on XYZ co. and XYZ directly pay tds to govt. instead of tds amount handover to ABC co.
  2. ZED

    ZED Well-Known Member

    No, not exactly, but they (auditor) can pay the tax, including in the total income such income on which tax was not deducted and that too within due date and return should also be filed on due date, then the interest burden u/s 201 would decrease.

    There has to be tax deduction, failure to which will invite several consequences. At this stage we can only reduce the impact of the consequences.

    As per S. 40a(ia)If the company will not deduct the tax then 30% of the expense would be disallowed.
    Even if TDS amount is paid out of own pocket, then again deduction shall not be allowed for it.
    If tax is not deducted, then there is also a possibility of levying a penalty u/s 271C.
    TDS certificate is also to be issued by the deductor to the deductee, failing which there is penalty u/s 271H. Deductor and deductee can not be the same person. Auditor can not issue TDS certificate to himself.

    As per proviso to S.201(1A)
    In case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident.

    271C. (1) If any person fails to—

    (a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B; or

    (b) pay the whole or any part of the tax as required by or under—

    (i) sub-section (2) of section 115-O; or

    (ii) the second proviso to section 194B,

    then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid.

    271H. (1) Without prejudice to the provisions of the Act, the Assessing Officer may direct that a person shall pay by way of penalty, if, he—

    (a) 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
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