It happens with businessman or companies that after the month of March, they realize that certain payments required tax deduction at source, but now that payment has been done and the financial year has passed, they are in searching or a solution to prevent from the tax authorities various proceedings for interest, penalty and prosecution. This post is devoted to providing a clear road ahead for all such cases of innocent lapses.
What are the consequences of non-deduction of tax at source?
Let us first know all the consequences associated with non-deduction of tax at source. These are :
- Disallowance of expenditure u/s 40(a)(ia)
- Interest u/s 201(1A) of the Income Tax Act
- The penalty under section 271C
- Prosecution for failure to deduct the tax
I am going to discuss each of the aforesaid consequences and what to do to save yourself from such consequences.