Tds has been deducted but not deposited -consequences

[Narasimha Subramanian]

We have given oneo of our buidlings on rent to a tenant. The tenant has been paying us rent deducting TDS. Now, we find that the tenant has not been paying TDS to the department for the last one year. Now, our accounts are being audited for the last FY and we have not received TDS Certificate from the tenant. What should be our action on the same and what would be our liability?

[Ravi Chopra]

You may file a complaint against the tenant with the income tax department. You may also file a suit in against the tenant for breach of contract. In income tax act also there are various stringent provision and the defaulter of TDS. See the provisions of section 276BB. "If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine."

[Narasimha Subramanian]

The tenant has deducted the TDS and not paid to the department. Based on their deductions, we paid that much amount short while paying advance tax. Now, the annual TDS amount that is deducted and not paid to the department is to the tune of more than 25L. Does this not mean that I have paid 25L short in my advance tax to the department and should I be paying this amount to the department? I need clarification on the monetary aspect and our liability. I understand we can file case against them or there is very stringent law for taking action on them. But, who is responsible and should pay that TDS amount to the department?

[Narasimha Subramanian]

I am rephrasing my question which is as below: TDS is regularly deducted by a tenant on the rent paid by him, and the amount so deducted has not been paid to the Government. Therefore we are unable to get the TDS Certificate from the deductor in spite of several reminders. There is a provision in the IT Act, U/s 272A (2) for imposing penalty for non issuance of the TDS Certificate to the Deductee, by the Additional Commissioner-TDS Wing. There also appears to be a provision in the Act for Imprisonment of the deductor for non issue of TDS Certificate. The point for clarification is, whether the Deductee can take credit of the amount so deducted in arriving at the “Tax Payable”, in the absence of TDS Certificate, and if so what is the procedure to be followed. Further, when there is a provision for penalizing the defaulter (deductor) for non payment of the deducted tax to the government and non-issue of TDS Certificate, there appears to be no protection to the deductee (Assessee) for taking credit of the amount so deducted in claiming relief to that extent.

[Guest]

I am in the same situation where the tenant has deducted TDS but not paid to the dept. How did you solve your problem? Pls advice asap

Vidya, Bangalore

AI Summary

TDS non-deposit consequences: deductee lacks certificate and must pursue the deductor for payment and administrative remedies. Tenant deducted TDS on rent but failed to remit it and did not issue TDS certificates to the landlord; the deductee questions whether they can claim credit without certificates and whether they are liable to pay the withheld amounts to the government. Remedies discussed include lodging a complaint with tax authorities, pursuing a civil suit against the deductor for breach of contract, and reliance on statutory penalties applicable to a deductor who fails to pay collected tax or issue certificates.