Fee and penalty for delay in furnishing of TDS/TCS Statement and penalty for incorrect information in TDS/TCS Statement

As per the existing provisions of the Income-tax Act, a deductor is required to furnish a periodical TDS statement (quarterly) containing the details of deduction of tax made during the quarter by the prescribed due date. A substantial number of the deductors are not furnishing their TDS statement within the prescribed due date. Delay in furnishing of TDS statement results in delay in granting of credit of TDS to the deductee and consequently results into delay in issue of refunds to the deductee tax payers or raising of infructuous demand against the deductee tax payers. Further, in large number of cases, the deductors are not furnishing correct information like PAN of the deductee, amount of tax deducted, etc. in the TDS statement. Furnishing of correct information in respect of tax deduction is critical for processing of return of income furnished by the deductee because credit for TDS is granted to the deductee on the basis of information furnished by the deductor.

In order to provide effective deterrence against delay in furnishing of TDS statement, following fees and penalty shall be levied–

(i) Fees u/s 234E

To provide for levy of fee of Rs.200 per day for late furnishing of TDS/TCS statement from the due date of furnishing of TDS/TCS statement to the date of furnishing of TDS/TCS statement. However, the total amount of fee shall not exceed the total amount of tax deductible during the period for which the TDS/TCS statement is delayed, and

(ii) 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 immunity from 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.

Also Read:

  1. https://taxguru.in/income-tax/tds-rate-chart-provisions-penalty-compliance-due-date-tds-return-filing.html

(Republished With Amendments)

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21 Comments

  1. Dr niyaz ahmad says:

    My employer deducted tax for 2014-15 an amount of RS213000.and issued me from 16 however same is not reflected in form 26AS INCOME TAX dept has raised an outstanding of RS 244000 including interest.i approached my employer to upload my tds but they have lost all records in floods documented by Fir in concerned police station what to do now

  2. Chandan dey says:

    The company has taken loan from NBFC and paid interest without deducating TDS. what is the solution in favour of company.
    Please give me the positive feedback as soon as possible.

  3. Lokesh Vaid says:

    Sir, I want to work on pirated Tally ERP9.
    I have setup for this but when i re install it on another PC it opens in Educational mode, I want to work in all dates.
    Pls Suggest me what to do.

  4. Nirne Sangram says:

    on what circumstances exemption will be received if the notice u/s 272A(2)k)has received? Please give the example/refrences/case laws regarding above sec.
    Please reply.

  5. HEMANT GUPTA says:

    DEAR SIR,
    I WANT TO KNOW ONE THING SIR, THAT IF I FILED A NIL TDS RETURN OF A PARTY EVEN AFTER DUE DATE…THEN ON THAT TIME WILL PARTY LIABLE TO PAY PENALTY OR NOT. AND ONE MORE THING THAT IS IT MANDATORY TO FILLED A NIL TDS RETURN. SUPPOSE WE ARE NOT AWARE OF TDS LIABILITY RIGHT NOW. THEN WE CAN FILED NIL RETURN OF TDS OF PARTY IN THIS MOMENT. AFTER THAT WE GOT THAT PARTY IS LIABLE TO DEDUCT TDS BUT TDS HAS NOT BEEN DEDUCTED BY PARTY.On THAT TIME WHAT PROCESS SHOULD WE FOLLOW.?? COMMENT PLZ SIR.

  6. SUPRABHAT DEB says:

    Dear Sir,

    If we are making payment for late filing fees for late submission of E-TDS Return on say 16th of January, 2013, so do we need to pay Rs.200/- only.
    Also wanted to know if we are paying it Online in Challan 281 Under which Section we have to pay this late filing fees and we have to select Other Payments there ?

    Plz.reply on given e-mail id @ the earliest.

    Thanks.
    SUPRABHAT DEB
    ACCOUNTANT

    ACS SHIPPING PRIVATE LIMITED
    6th Floor, Room No. 5
    6, Little Russel Street
    Kolkata – 700 071
    TEL: +91 33 2289 5972 / 5973 / 5974 /5975
    FAX: +91 33 4006 0556
    email: [email protected]
    Skype: taxguid

  7. JUSTIN MASIH says:

    DEAR SIR,
    PLEASE PROVIDE ME DETAILS FOR TCS ON COAL SALE, ON WHICH HEAD WILL IT BE PAID WILL IT FALL UNDER MINING OR MINERALS AND ALSO THE ACCOUNTING HEAD WHERE THE CHALLAN WILL BE PAID.
    WARM REGARDS,
    JUSTIN MASIH

  8. Jatin says:

    Dear Sir,

    If we are making payment for late filing fees for late submission of E-TDS Return on say 16th of July, 2012, so do we need to pay Rs.200/- only or it will be Rs.600/- as if we pay online on 16/07/2012 then .csi file will take at least one day to show challan at NSDL Site so it will come there on 17/07/2012 and we file return on 18/07/2012 so there will be 3 days delay and late filing fees will be Rs.600/- so always we need to add 2 days late filing fees when ever there is late filing of E-TDS Return henceforth.

    Also wanted to know if we are paying it Online in Challan 281 Under which Section we have to pay this late filing fees and we have to select Other Payments there ???

    Plz.reply on given e-mail id @ the earliest.

    Thanks.

  9. venkat says:

    THe article has been taken from the budget 2012-13. This had come through the finance act which was assented by the president on 28.05.2012.

  10. jay says:

    The article is dated 06 jul 2012, but talks “proposed amendments” w.e.f 01.07.2012
    has this
    “proposed amendments” come into effect ?
    if so, what is the relevant notification / press release.

    pl confirm the exact details – whether “proposed” or already effective from 01.07 ?
    notification reference

  11. HEMCHAND KOHLI says:

    Dear Sir,

    Thanks for sharing, But I am facing problem in default generated.  I revise the return after depositing interest for late payment.  But still default is not being removed.  Please tell me how can be removed default.

    Thanks

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