TDS DEFAULT
TDS (Tax Deducted at Source) default refers to a situation where an entity fails to deduct the required amount of tax at the source as mandated by tax regulations. In many tax systems, certain types of payments are subject to TDS, meaning that a specified percentage of the payment must be deducted and remitted to the government by the payer before the balance is paid to the recipient.
Common instances where TDS is applicable include salaries, interest, dividends, and
payments to contractors or professionals. When an organization fails to deduct
TDS or deducts it at a lower rate than specified by tax laws, it is considered
a TDS default.
Here are some common reasons for TDS default:
1. Non-deduction of TDS: Failure to deduct TDS on eligible transactions.
2. Short deduction of TDS: Deducting TDS at a rate lower than the prescribed rate.
3. Non-payment of TDS after deduction: Failure to remit the deducted TDS amount to the government within the stipulated time frame.
4. Non-filing of TDS returns: Failure to submit TDS returns within the due dates.