For late TDS issuance of the certificates by deductors including individual deductors, Budget 2022 has urged to increase the penalty. The decision taken by the budget is to increase the penalty of Rs 500 per day from Rs 100 per day. In the major times, the employers and financial institutions such as banks and others are needed to deduct the TDS on the salaries or payments done by people. But in various cases, the individuals are also needed by the law to deduct the TDS on payments. Every deductor of TDS is needed to provide the TDS certificate to the deductee individuals from whose the TDS has been reduced. The penalty will be imposed on the late issuance of the certificate beyond the given date.
“Budget has proposed to increase the penalty for default in the issuance of TDS certificate as per the prescribed timelines by tax deductor. The penalty has been increased from Rs 100 to Rs 500 per day for the period of delay. However, such penalty cannot exceed the tax amount deductible, mentioned by the tax expert.”
A person excluding the subject to the tax audit is needed to deduct the TDS in the mentioned conditions:
- When the monthly rent on the house would be more than Rs 50000
- Purchasing an immovable property whose sale consideration would be more than Rs 50 lakh
- When the payments are made to the contractors or the professionals when the total amount subjected to pay is more than Rs 50 lakh in the financial year
A buyer of the immovable property is needed to deduct the tax with 1% of the sale value and files the challan cum statement in Form No 26QB to deposit the TDS amount through the government. From the last date of depositing the TDS amount, he or she is needed to provide the TDS certificate that is Form 16B under 15 days. When the TDS certificate would not be provided in 15 days then he or she would be subjected to furnish the penalty of Rs 500 per day from FY 2022-23 under the proposals.
Similar to that the person living in the rented house and furnishing the monthly rent of Rs 50000 or exceeding that would be needed to deduct the tax once in the fiscal year. The person is subjected to provide the TDS certificate Form 16C to the landlord in 15 days from the last date of depositing the TDS amount through the challan cum statement (Form 26QC). When the TDS certificate is not being provided within the last date then the tenant would be entitled to furnish the penalty of Rs 500 per day from April 1, 2022.
The Budget Memorandum States: Section 272A mentioned that the obedience with different responsibilities beneath the income tax act through penalizing the non-obedience and act as a deterrent. CAG however imposes a fine of Rs 100 in their report on the entertainment industry as being too low. The penalty has not been risen since the beginning of the section in 1999 and does not have enough deterrence value. Hence the same is proposed to raise the penalty for the failures listed beneath sub-section (2) of section 272A to Rs 500 from the amount of Rs 100 which is currently in force.
