Tds deducted but not paid

[DEVKUMAR KOTHARI]

Many small business persons have been shocked by disallowance u/s 40 (a)((ia). The tax was not deducted, as in past, the payees ahve no taxable income. TDS would simply increase work load- deduction, TDS return and certificates, claim for refund and refund. For an alleged failure to deduct tax of say Rs.50000 on contractors payments of Rs.25 lakh disallowance of entire sum of Rs. 25 lakh is not at all justified. There are separate provisions for monitoring TDS, its deposit, interest in case of delayed deposit,penalties etc. The payee is ultimately liable to pay his tax. TDS is credited only if it is paid by deductor and certificate is issued. In such circumstances, there is no justification of S. 40(a)(ia). We can also look from the point of view that if a transporter provide PAN detils, TDS is not required, then why in case of other payments, non deposit of TDS has been made so harsh on assessees. Though provision is made to allow the same when TDS is deposited, but that cannot justify disallowance fue to failure to deduct or deposit tax due to bonafide reasons, ignorance, different opinions prevailing etc. Readers are requeted to send their view which will help in preparing case for presentation before courts to hlod the provision of section 40(a) (ia) as invalid.

AI Summary

Concerns Raised Over Double Taxation Under Section 40(a)(ia) for Non-Deduction of TDS; Calls for Amendments A discussion highlights concerns over the disallowance of expenses under Section 40(a)(ia) of the Income Tax Act due to non-deduction or non-payment of TDS. Participants argue that this provision unfairly taxes the same income twice and can be harsh on assessees, especially in cases of genuine misunderstanding or differing interpretations. The discussion suggests that professional bodies should advocate for amendments to allow retrospective expense allowances when TDS is eventually paid. The forum calls for collective action to address these issues and provide practical solutions for taxpayers.