As per the provisions of the Indian Income tax law, Tax Deducted at Source (TDS) on payments/credits made during the month of March, needs to be deposited latest by 30 April.
In wake of Covid-19, Indian government issued an ordinance on 31st March 2020, giving relief to tax payers from various tax compliances, adherence of which were difficult due to the lockdown scenario. The due dates for the compliances as mentioned in the ordinance have been extended to 30th June, 2020.
On account of the above-stated ordinance, tax-payers heaved a sigh of relief and felt that they need not undertake any TDS compliance as of now. However, it may be noted that there is no extension in due date for deposit of TDS and the due date for deposit of TDS for the month of March 2020 still stands at 30th April 2020.
In this regard, one may note that the reliefs from TDS provisions provided by the ordinance are as under:
- If the TDS is deposited latest by 30 June 2020 –
- Delay in depositing TDS for the month of March will invite a reduced interest of 0.75% per month instead of the existing rate of 1.5% per month.
- No penalty shall be levied on account of the above delay.
- No prosecution shall be sanctioned on account of the above delay.
- Due date for filing TDS returns have been extended from 31st May, 2020 to 30th June, 2020.
Given the above, it may be inferred that interest @ 0.75% per month will be levied for any delay in depositing TDS –
- beyond 30thApril, 2020 for the month of March 2020
- beyond 7thMay, 2020 for the month of April 2020; and
- beyond 7thJune, 2020 for the month of May 2020.
Further, the reduced rate of interest and relief from penal and prosecution provisions will be applicable only if the TDS is deposited on or before 30th June, 2020.
Hence, it is advisable that the tax- payers should deposit the TDS on or before the due dates to avoid any repercussions. In a case,where on account of lock-down, the tax payer is facing any sort of difficulty in computing the TDS liability, one may deposit TDS on an estimated basis so that interest on late payment is applicable only on the shortfall, if any. In case of any excess, the same can always be adjusted towards the TDS liability for FY 2020-21.
Posted by: Amit Kumar Garg
Designation: Managing Partner
Organization: AKGVG & Associates
Mobile no: +91-9818330516