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Fees & Penalty for late / Non filing of TDS Return

Before understanding the penalty provisions for failure to furnish the statement of Tax Deducted at Source or statement of Tax Collected as Source (i.e. commonly known as TDS/TCS return) we shall first have a look at the few basic duties of a person liable to deduct/collect tax at source and due dates for filing of TDS/TCS return.

No filing or Late filing of TDS returns or TDS statement shall invite 2 penal consequence 1.Fee for late filing U/s 234E and 2. Penalty for late filing or Non filing of TDS statement U/s 271H.

Before understanding the penalty provisions for failure to furnish the statement of Tax Deducted at Source or statement of Tax Collected as Source (i.e. commonly known as TDS/TCS return) we shall first have a look at the few basic duties of a person liable to deduct/collect tax at source and due dates for filing of TDS/TCS return.

Duties of the person liable to deduct/collect tax at source

  • He shall obtain Tax Deduction Account Number or Tax Collection Account Number (as the case may be) and quote the same in all the documents pertaining to TDS/TCS.
  • He shall deduct/collect the tax at source at the applicable rate.
  • He shall pay the tax deducted/collected by him to the credit of the Government.
  • He shall file the periodic TDS/TCS statements, i.e., TDS/TCS return.
  • He shall issue the TDS/TCS certificate in respect of tax deducted/collected by him.

Due Dates for filing of TDS/TCS return

The due dates for filing of TDS/TCS return for different quarters of Financial Year 2018­19 are as follows:

Financial Year 2018-19

Quarter ending Due date for filing of TDS return (Both for
Government and other
Deductor)
Due date for filing of
TCS return
30th June 2018 31st July 2018 15th July 2018
30th September 2018 31st October 2018 15th October 2018
31st December 2018 31st January 2019 15th January 2019
31st March 2019 31th May 2019 15th May 2019

Basic provisionsA person who fails to file the TDS/TCS return or does not file the TDS/TCS return by the due dates prescribed in this regard has to pay late filing fees as provided under section 234E and apart from late filing fees he shall be liable to pay penalty under section 271H. In this part you can gain knowledge about the provisions of section 234E and section 271H.

Late filing fees under section 234E

As per section 234E, where a person fails to file the TDS/TCS return on or before the due date prescribed in this regard, then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day during which the failure continues. The amount of late fees shall not exceed the amount of TDS.

TDS/TCS return cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. It should be noted that Rs. 200 per day is not penalty but it is a late filing fee.

Illustration

The quarterly statement of TDS i.e. TDS return for the first quarter of the year 2017-18 is filed by Mr. Kapoor on 4-4-2018. Tax deducted at source during the quarter amounted to Rs. 8,40,000. What will be the amount of late filing fees to be paid by him for delay in filing the TDS return?

**

The due date for filing of TDS return for the first quarter of the year 2017-18 i.e. April 2017 to June 2017 is 31st July, 2017. The return is filed on 4th April, 2018, thus there is a delay of 247 days as computed below:

 Particulars Days
August 2017 31
September 2017 30
October 2017 31
November 2017 30
December 2017 31
January 2018 31
February 2018 28
March 2018 31
April 2018 4
 Total 247

From the above computation it can be observed that there is a delay of 247 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 247 days the late filing fees will come to Rs. 49,400.Illustration

The quarterly statement of TDS i.e. TDS return for the second quarter of the year 2017­18 is filed by Essem Ltd. on 4-4-2018. Tax deducted at source during the quarter amounted to Rs. 8,400. What will be the amount of late filing fees to be paid by the company for delay in filing the TDS return?

**

The due date of filing the TDS return for the second quarter of the year 2017-18 i.e. July 2017 to September 2017 is 31th October, 2017. The return is filed on 4th April, 2018, thus there is a delay of 155 days as computed below:

 Particulars Days
November 2017 30
December 2017 31
January 2018 31
February 2018 28
March 2018 31
April 2018 4
 Total 155

From the above computation it can be observed that there is a delay of 155 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 155 days the late filing fees will come to Rs. 31,000. However, the late filing fees cannot exceed the amount of tax deducted at source. TDS for the quarter is Rs. 8,400 and hence late filing fees shall beRs. 8,400.Illustration

The quarterly statement of tax collected at source i.e. TCS return for the first quarter of the year 2017-18 is filed by Mr. Krunal on 4-8-2017. Tax collected at source during the quarter amounted to Rs. 84,000. What will be the amount of late filing fees to be paid by him for delay in filing the TCS return?

**

In case of Non-Government deductor, the due date of filing the TCS return for the first quarter of the year 2017-18 i.e. April 2017 to June 2017 is 15th July, 2017. The return is filed on 4th August, 2017, thus there is a delay of 20 days as computed below:

 Particulars Days
July 2017 16
August 2017 4
 Total 20

From the above computation it can be observed that there is a delay of 20 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 20 days the late filing fees will come to Rs. 4,000.Illustration

The quarterly statement of tax collected at source i.e. TCS return for the second quarter of the year 2017-18 is filed by Mr. Raja on 4-12-2017. Tax collected at source during the quarter amounted to Rs. 2,520. What will be the amount of late filing fees to be paid by him for delay in filing the TCS return?

**

The due date of filing the TCS return for the second quarter of the year 2017-18 i.e. July 2017 to September 2017 is 15th October, 2017. The return is filed on 4th December, 2017, thus there is a delay of 50 days as computed below:

 Particulars Days
October 2017 16
November 2017 30
December 2017 4
 Total 50

From the above computation it can be observed that there is a delay of 50 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 50 days the late filing fees will come to Rs. 10,000. However, the late filing fees cannot exceed the amount of tax collected at source. TCS during the quarter amounts to Rs. 2,520 and hence, late filing fees shall be Rs. 2,520.Illustration

The quarterly statement of Tax deducted at source i.e. TDS return for the last quarter of the year 2017-18 is not filed by Mr. Raj till 31st May, 2018. Can he file the TDS return of last quarter of the year 2017-18 after 31st May, 2018 without payment of any late filing fees?

**

The due date of filing the TDS return for the last quarter of the year 2017-18 i.e. January 2018 to March 2018 is 31st May, 2018. The return is not filed till 31st May, 2018 and hence late filing fees under section 234E of Rs. 200 per day of default will be levied. TDS return cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. Hence, in this case, Mr. Raj cannot file the TDS return without payment of late filing fees of Rs. 200 per day.

Computation of fee under Section 234E at the time of processing of TDS/TCS statement

Section 200A of the Income-tax Act provides for processing of TDS statements for determining the amount payable or refundable to the deductor. Provisions of Section 200A has been amended by the the Finance Act, 2015 so as to enable computation of fee payable under under section 234E at the time of processing of TDS statements.

As the mechanism of TCS statement is similar to TDS statement, a new section 206CB has been inserted by Finance Act, 2015 to provide for processing of TCS statements on the lines of existing provisions for processing of TDS statement contained in section 200A of the Income-Tax Act. The new section 206CB also provides for mechanism for computation of fee payable under section 234E at the time of processing of TCS statement.

Penalty under section 271H

As per section 271H, where a person fails to file the statement of tax deducted/collect at source i.e. TDS/TCS return on or before the due dates prescribed in this regard, then assessing officer may direct such person to pay penalty under section 271H. Minimum penalty can be levied of Rs. 10,000 which can go upto Rs. 1,00,000. Penalty under section 271H will be in addition to late filing fees prescribed under section 234E.

Apart from delay in filing of TDS/TCS return, section 271H also covers cases of filing incorrect TDS/TCS return. Penalty under section 271H can also be levied if the deductor/collector files an incorrect TDS/TCS return. In other words, minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000 can be levied if the deductor/collector files an incorrect TDS/TCS return.

No penalty will be levied under section 271H for the failure to file the TDS/TCS return, if the person proves that after paying tax deducted/collected by him, along with the late-filing fee and interest (if any), to the credit of the Central Government, he had filed the TDS/TCS return before the expiry of a period of one year from the due date of filing the TDS/TCS return. In other words, no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied:

  • The tax deducted/collected at source is paid to the credit of the Government.
  • Late filing fees and interest (if any) is paid to the credit of the Government.
  • The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.

It should be noted that the above relaxation is applicable only in case of penalty levied under section 271H for delay in filing the TDS/TCS return and not in case of filing incorrect TDS/TCS statement.

Apart from above relaxation, in following two cases the taxpayer can get relief from penalty under section 271H:

  • Under section 273A(4) the Principal Commissioner of Income-tax or Commissioner of Income-tax has power to waive or reduce the penalty levied under the Income-tax Act. Penalty can be waived or reduced by the Commissioner of Income-tax if the conditions specified in section 273A(4) in this regard are satisfied.
  • Apart from shelter of section 273A(4), section 273B also provides immunityfrom penalty in genuine cases. As per section 273B, penalty under section 271H will not be levied if the taxpayer proves that there was a reasonable cause for failure.

Illustration

The quarterly statement of tax deducted at source i.e. TDS return for the first quarter of the year 2017-18 is filed by Mr. Krunal on 4-4-2018. Tax deducted at source during the quarter amounted to Rs. 84,000. Before filing the TDS return he has paid the TDS, interest and late filing fees to the credit of the Government. Will he be liable to penalty under section 271H for delay in filing the TDS return?

**

Penalty under section 271H can be levied for delay in filing the TDS return. In this case, the due date of filing the TDS return for the first quarter of the year 2017-18 i.e. April 2017 to June 2017 is 31st July, 2017. The return is filed on 4th April, 2018, thus there is a delay of 247 days (i.e. less than a year). As per section 271H(3) no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied :

  • The tax deducted/collected at source is paid to the credit of the Government.
  • Late filing fees and interest (if any) is paid to the credit of the Government.
  • The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.

In the present case, all the aforesaid conditions are satisfied because the delay in filing the TDS return is of less than 1 year and interest and late filing fees are paid before filing the TDS return, thus penalty under section 271H will not be levied.

The same provision as discussed above will apply in case of delay in filing the statement of tax collected at source i.e. TCS return.

Illustration

The quarterly statement of tax deducted at source i.e. TDS return for the first quarter of the year 2017-18 is filed by Mr. Rahul on 20-8-2018. Tax deducted at source during the quarter amounted to Rs. 1,84,000. Before filing the TDS return he has paid the TDS, interest and late filing fees to the credit of the Government. Will he be liable to penalty under section 271H for delay in filing the TDS return?

**

Penalty under section 271H can be levied for delay in filing the TDS return. The due date of filing the TDS return for the first quarter of the year 2017-18 i.e. April 2017 to June 2017 is 31st July, 2017. The return is filed on 20th Aug., 2018, thus there is a delay of 385 days (i.e. more than a year). As per section 271 H(3) no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied :

  • The tax deducted/collected at source is paid to the credit of the Government.
  • Late filing fees and interest (if any) is paid to the credit of the Government.
  • The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.

In the above case, the delay is of more than 1 year and hence the above immunity will not be available. Thus, the Assessing Officer can levy penalty under section 271H. Minimum penalty of Rs. 10,000 and maximum penalty of Rs. 1,00,000 can be levied by the Assessing Officer. However, Mr. Rahul has following two remedies to get relief from penalty:

  • He can apply to Principal Commissioner of Income-tax or Commissioner of Income-tax under section 273A(4) to seek relief from penalty.
  • He can seek relief under section 273B by proving that there was a reasonable cause for failure.

The same provision as discussed above will apply in case of delay in filing the statement of tax collected at source i.e. TCS return.

Illustration

The quarterly statement of tax deducted at source i.e. TDS return for the first quarter of the year 2017-18 is filed by Mr. Sharma on 10-7-2017. The particulars of the tax deducted at source as mentioned in TDS return are incorrect. Will he be liable to pay penalty under section 271H for delay in filing the TDS return and for furnishing the inaccurate particulars in the return?

**

Penalty under section 271H can be levied for following defaults:

(1) Delay in filing the TDS/TCS quarterly statement i.e. TDS/TCS quarterly return.

(2) Furnishing incorrect TDS/TCS quarterly statement i.e. TDS/TCS quarterly return.

In the present case Mr. Sharma has filed an incorrect TDS return and hence he shall be held liable to pay penalty under section 271H. Minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000 can be levied. Mr. Sharma will have no remedy under Section 271H(3) to claim relief from penalty for furnishing of inaccurate particulars in the return. However, the taxpayer can seek relief in the following way:

  • He can apply to Principal Commissioner of Income-tax or Commissioner of Income-tax under section 273A(4) to grant relief from penalty.
  • He can seek relief under section 273B by proving that there was a reasonable cause for failure.

The same provision as discussed above will apply in case of delay in filing the statement of tax collected at source i.e. TCS return.

(Republished with amendments)

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Categories: Income Tax

View Comments (100)

  • Whether late filling return penalty in year 2012 is waived in that year? whether aided school gets this benefits

  • I work for a govt. office.
    My employer deducted TDS (Rs. 8,000)from my salary for the FY 2015-16 (Period Apr to Sep) but not filed the TDS returns.
    Hence tds amount is not reflected in 26AS
    He is not filing late returns, as it would attract penalty.
    Income Tax office is sending SMS to file the Returns for AY 16-17
    How can i deal with this situation

    • You have to approach to your employer to correct the TDS returns. If tax credit is not available to your 26-as you cannot claim the TDS. However you can ask for form 16 available from traces sites from your employer.

  • We have a firm & we pay tds for rent, filed Tds Return bit late so i am getting notice of late filing levy as so huge amount of around 1 & half lakhs so is it mandatoryto pay... plz guide me.

    • I have mistakenly filled TDS return instead of TCS return,therefore later filled TCS return very late and huge amount of cess under section 234E is now payable,kindly enlighten the way and also reply whether appeal can be filled.

  • sir.
    There was tds due in the end of Nov.2017 but the quarterly nil returned was filed in Dec2017. and March.2018.what should be the effect to me.should I have to pay penalty along with Interest.

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