Consequences of Non-Deduction of TDS under Income Tax

[milan bamal]

Dear Respected Members,

I would like to seek clarification on the consequences if an audited firm fails to deduct TDS under Section 194C/Other Section's of the Income-tax Act.

As per my understanding:

1. If TDS is not deducted where it is required, 30% of the related expenditure is disallowed under the Income-tax Act while computing taxable income.
2. Apart from this disallowance, are there any other consequences?
3. For example, if the firm is subjected to an Income-tax assessment or scrutiny in the future, can the Income-tax Department still require the firm to deduct and deposit the TDS on the same expenditure, even though 30% of that expenditure has already been disallowed in the same assessment year?
4. In other words, does the disallowance of 30% under the Income-tax Act relieve the deductor from the obligation to deduct and deposit TDS, or can both consequences apply simultaneously?

I would appreciate your guidance on this issue.

AI Summary

TDS non-deduction may trigger expenditure disallowance and raises whether the separate obligation to deduct and deposit tax continues. Non-deduction of TDS on payments requiring deduction may lead to disallowance of 30% of the related expenditure in computing taxable income. The issue is whether the tax department may also require the deductor to deduct and deposit TDS on the same expenditure during assessment or scrutiny. Clarification is sought on whether expenditure disallowance removes the separate TDS obligation or whether both consequences can apply simultaneously.