Disallowance under section 40(a)(i)/(ia)/(iii) for non Deduction of TDS

By | October 16, 2016

Disallowance under section 40(a)(i)/(ia)/(iii) for non Deduction of TDS

Disallowance under section 40(a)(i)/(ia)/(iii)

Section 40(a) provides that in the case of any assessee following amounts shall not be deducted in computing the income chargeable to tax,—

(i)           any interest, royalty, fees for technical services or other sum chargeable under this Act, which is payable,—

(A)          outside India; or

(B)          in India to a non-resident, not being a company or to a foreign company,

               on which tax is deductible at source and such tax has not been deducted or, after deduction, has                  not been paid on or before the due date specified in section 139(1).

               Where in respect of any such sum, tax has been deducted in any subsequent year, or has been  deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.

(ia)         thirty per cent of any sum payable to a resident, on which tax is deductible at source and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139.

               Where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, thirty per cent of such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.

               Where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee.

(iii)         any payment which is chargeable under the head “Salaries”, if it is payable—

(A)          outside India; or

(B)          to a non-resident,

               and if the tax has not been paid thereon nor deducted therefrom under Chapter XVII-B;

So far as ‘Salary’ payments are concerned, provisions of section 40(a)(ia) shall apply in case of payments to residents and section 40(a)(iii) shall apply in case of payments to non-residents.

In case of ‘any other payments’ provisions of section 40(a)(ia) shall apply in case of payments to residents and section 40(a)(i) shall apply in case of payments to non-resident.

 

3 thoughts on “Disallowance under section 40(a)(i)/(ia)/(iii) for non Deduction of TDS

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