Budget 2024 introduces a key amendment to Section 271H of the Income-tax Act, altering the penalty relief period for late TDS and TCS statements. Previously, taxpayers could avoid penalties by filing belated returns within one year from the due date. The new amendment shortens this period to one month, requiring TDS/TCS statements to be filed within a month of the due date to avoid penalties, provided that TDS/TCS along with fees and interest is paid. This change aims to address issues caused by late filings, such as mismatches in TDS/TCS and unnecessary demands. The revised penalty timeline will come into effect from April 1, 2025, enhancing compliance and reducing processing complications.
Budget 2024: Penalty for failure to furnish statements
Section 271H of the Act inter alia relates to penalty for failure to file Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) returns/ statements within the due date. Sub-section (3) of section 271H of the Act states that no penalty shall be levied if the person proves that after paying TDS/ TCS along with fees and interest to the credit of the Central Government, the person has filed the TDS/TCS statement before the expiry of period of one year from the time prescribed for furnishing such statement.
2. While earlier the due date to file a belated return by the assessee was one year from the end of the assessment year, the time limit presently is 31st December of the same assessment year. Deductees/ collectees face great inconvenience if the TDS/TCS statements by deductors/ collectors are not furnished in time leading to mismatch in TDS/TCS during processing of income tax returns and raising of infructuous demands.
3. To ensure better compliance, it is proposed to amend sub-section (3) of section 271H to provide that no penalty shall be levied if the person proves that after paying TDS/ TCS along with fees and interest to the credit of the Central Government, he has filed the TDS/TCS statement before the expiry of period of one month from the time prescribed for furnishing such statement.
4. This amendment will take effect from the 1st day of April, 2025.
[Clause 81]
Extract of Clause 81 of Finance Bill 2024
Clause 81 of the Bill seeks to amend section 271H of the Income-tax Act, relating to penalty for failure to furnish statements, etc.
Sub-section (1) of the said section provides for penalty for failure to deliver or cause to be delivered statements referred to in sub-section (3) of section 200 (relating to tax deducted at source) or proviso to sub-section (3) of section 206C (relating to tax collected at source) or furnishing of incorrect information in the statement.
Sub-section (3) of the said section prescribed time limit of one year for delivering or causing to be delivered the statements.
It is proposed to amend the sub-section (3) so as to reduce the time limit from one year to one month.
This amendment will take effect from 1st April, 2025.
81. Amendment of section 271H.
In section 271H of the Income-tax Act, in sub-section (3), for the words “one year”, the words “one month” shall be substituted with effect from the 1st day of April, 2025.
