Every deductor (Who deduct TDS on behalf of a payee) has the duty to deposit TDS within the prescribed limit to the account of Income Tax department as per rules by Income Tax Act.
Where a persons fails to deduct or pay tax, he shall be liable to pay penalties as per income tax act.
In this article, we will discuss time limit to deposit TDS and penalty on failure or late payment to deposit TDS.
Interest on Late Payment or Non Deduction of TDS
If any person liable to deduct or collect tax at source or any person who opts to deposit TDS on perquisites on behalf of his employee, fails to deduct or collect the whole or part of TDS/TCS or fails to deposit the tax deduct/collected by him, he shall be liable to pay simple interest as under:
- 1% for every month or part of a month for the period from the date on which the tax was deductible to the date of actual deduction1, and 1.5% for every month or part of a month for the period from the date of deduction to the date of actual deposit;
- 1% for every month of part of a month for the period from the date on which the tax was collectible to the date of actual deposit.
The interest shall be paid before furnishing the statement.
Penal Interest Table for Late Payment of TDS
|Failure to Deduct TDS||201(1A)||From required date for deduction to actual date of deduction||1%|
|Failure to Deposit TDS in Time||201(1A)||From actual date of deduction to actual date of deposit||1.5%|
|Failure to Collect tax (TCS)||206C(7)||From required date for collection to the actual date of collection||1%|
Penalty or Fee for Late filing of TDS Returns
Where a persons fails to submit TDS returns with the time (Check due dates to file TDS Return here), he shall be liable to pay a sum of Rs. 200 for every day during which the failure continues. (u/s 234E)
However, the amount of fee or penalty shall not exceeds the amount of tax deductible.
For Example: If penalty/fee is Rs. 3000 but TDS is Rs. 2000 then you have to pay Rs.2000.
Penalty or Fee for Non-Filing of TDS Return
If a person fails to submit TDS return or submit incorrect returns, he shall to pay Rs. 10,000 which may extend up to Rs.1,00,000. (u/s 271H)
However, the above penalty u/s 271H will not be levied in the following cases.
- If the person proves that he paid TDS along with interest and fees.
- If the person proves that he submit TDS return before the expiry of a period of one year form the time for delivering such TDS return.
Failure to Deposit TDS/TCS
There is rigorous imprisonment for maximum 3 months but maximum 7 years in addition to file.
- This interest can be reduced/waived by the Chief CIT or Director General of Income-tax in specified cases. Refer Cir. No.11/2017, dt. 24-.3-2017.