What is the due date to deposit Tax Deducted at Source (TDS) to the government treasury? Where the TDS deduction time is mentioned? Who is responsible for payment of TDS? What are the consequences of non-deduction of TDS?
Such lots of question arise when we talk about TDS. One of the most frequent calculation is TD calculation on salaries and before depositing the TDS, you have to know how much amount you have to deduct. We have online tax course where we have showed the TD calculation on salaries using an example.
Today, I will discuss all about TDS deposit time limit, manners of payment subject to deduction of tax at source and penalty for not deducting TDS.
At first, you have to know where the TDS is applicable. In accordance to Income Tax Ordinance, Chapter VII states the TDS rates from section 50 to section 56. Based on that sections, if you require to deduct or collect tax at source then you have to do so.
And after that you have the legal requirement as per tax law to deposit the deducted or collected tax to the government treasury within prescribed time limit and manner which I will describe below one by one.
Based on this article I have also made a short video where I have described all these issues. You may watch the video.
What is the due date of deposit of TDS?
TDS deposit to government treasury within due date is important because failure to do so the responsible person is liable to pay the TDS amount.
According to section 59 of Income Tax Ordinance 1984, the tax deducted or collected at source shall be deposited within prescribed time. The prescribed time is mentioned in the Rule 13.
So, according to Rule 13, time limit for payment of tax deducted at source is:
|Time of deduction or collection||Date of payment to the credit of the government|
|Any month from July to May of a year||Within two weeks from the end of the month|
|Any day from 01 to 20 June of a year||Within seven days after the deduction or collection|
|Any day from 21 to 28 June of a year||The next day of the deduction or collection|
|On the 29 and 30 June of a year||Same day|
So, as per above date of deposit of TDS, you have to make payment before last date of deposit of TDS. Because if the payment subject to deduction of tax at source was not deposited within due date by the responsible person then he will personally liable. So, the legal consequences go to the employee not to the company who are responsible to make the payment.
As per above mentioned date of payment, TDS have to be deposited to the government treasury according to the manner described in the Rule 14 of Income Tax Ordinance 1984.
What is the manner of TDS payment?
According to Rule 14 of Income Tax Ordinance 1984, the deducted or collected tax at source shall pay by the responsible person within the due date mentioned in the above table following any of the manner:
a) remitting the TDS through an income tax challan into the Bangladesh Bank or the Sonali Bank;
b) transferring the amount electronically in the manner specified by the Board;
c) The Board may specify the manner by notification in the official Gazette and shall be paid or be electronically transferred to the credit of the Government accordingly.
So, now we know when to deposit the TDS amount and how to credit it to the government treasury.
If the tax was not deducted at source by the responsible person during making the payment, then what will be the consequences according to tax law?
Consequences of failure to deduct tax at source
Most of the cases, responsible person is not aware about the TDS rate with section references as per income tax law. Expenses have been incurred and payments have also been made to the creditors without deducting tax at the time of payment.
To avoid the risk of deducting tax at source, the responsible person shall always check Chapter VII of the Ordinance. If the tax is applicable at source, then payment should made after deducting tax appropriately.
When you are complied by deducting tax at source, then you are legally liable to pay the TDS to the government treasury through tax challan before last day of tax deposit deadline. Otherwise responsible person will be defaulter as per tax law.
Responsible person shall be personally liable to pay the tax if:
a) fails to deduct or collect tax at source at applicable rate; or
b) deducted or collected but at lesser rate than at applicable rate; or
c) deducted or collected but not deposited to the government treasury.
In the above cases, the amount of tax shall be payable by the responsible person and in addition to that amount, he shall also liable to pay an additional amount at 2% per month on such amount.
Provided that the period for calculation of additional amount shall not exceed 24 months.
So, to avoid the penalty, the responsible person shall deduct or collect at source following the rates specified in the respected section and deposited the same accordingly before last day of deposited time.