Income Tax - Salary - TDS - CBDT Issues Instructions
CBDT has issued a Circular explaining the details of income tax on salary and the related statutory provisions.
Failure to deposit TDS: The Circular warns that... If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time as under:
He shall be liable to action in accordance with the provisions of section 201. Section 201(1A) lays down that such person shall be liable to pay simple interest
(i) at 1% for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted and
(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.
Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing of quarterly statement of TDS for respective quarter.
Section 271C lays down that if any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax deducted, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him.
Further, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time, the tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, along with fine.
Furnishing of Certificate for Tax Deducted (Section 203): Section 203 requires the DDO to furnish to the employee a certificate in Form 16 detailing the amount of TDS and certain other particulars. The Act stipulates that the Form 16 should be furnished to the employee by 31st May after the end of the financial year in which the income was paid and tax deducted. Even the banks deducting tax at the time of payment of pension are required to issue such certificates.
Compulsory Requirement to furnish PAN by employee (Section 206AA): Section 206AA makes furnishing of PAN by the employee compulsory in case of receipt of any sum or income or amount, on which tax is deductible. If employee (deductee) fails to furnish his/her PAN to the deductor, the deductor has been made responsible to make TDS at higher rates:
CBDT Circular No. 8/2012 [F.NO. 275/192/2012-IT(B)] Dated: October 05, 2012