Article explains Provisions of Section 271C of Income Tax Act, 1961 which provides for Penalty for failure / non-deduction / non-payment of TDS.

Basically, as we know, ‘TDS’ i.e. Tax Deduction at Source is a system through which tax is deducted at the very source of income. Putting up simply, the TDS system works as under –

-The payer (i.e. deductor), liable for making payment of specified nature, is required to deduct TDS.

-The payer (i.e. deductor) remits the balance amount (after TDS deduction) to the payee (i.e. deductee).

-The TDS so deducted by the payer (deductor) is required to be deposited with the Government within the specified due dates.

The penalty provisions of section 271C of the Income Tax Act, 1961, comes into the picture only when the deductor either fails to deduct the TDS or fails to deposit the same within the prescribed time limit.

The present article explains the applicability of provisions of section 271C; summarizes the relevant due dates; the amount of penalty payable under section 271C and related Frequently Asked Questions (FAQ).

Applicability of provisions of section 271C of Income Tax Act, 1961

The penalty under section 271C is applicable under the following conditions –

  • The person fails to deduct, the whole or part of, tax at source (i.e. TDS).
  • The person fails to pay, the whole or part of, Dividend Distribution Tax (DDT) on the dividend distributed [i.e. tax as required under section 115O (2)].
  • The person fails to pay, the whole or part of, tax on winning from lottery or crossword puzzle [i.e. tax as required under section 194B].

It is highly pertinent to note here that the penalty under section 271C shall be imposed only and only by the Joint Commissioner.

Further, it should also be noted that in case the defaulter proves the reasonable cause for the failure, then, as per section 273B of the Income Tax Act, the penalty cannot be imposed under section 271C, on the defaulter.

Word writing text Penalty Notice. Business photo showcasing the immediate fine given to showing for minor offences

Relevant due date for payment of TDS to avoid penalty leviable under section 271C

In general, in order to avoid the penalty leviable under section 271C, the deductor is required to deduct TDS within the earlier of the following dates –

  • Date of credit of specified income to the account of the payee; or
  • Date of payment of specified income through cash or draft or cheque or any other payment mode.

In order to avoid the penalty leviable under section 271C, the deductor is required to deposit the TDS within following due dates –

Type of Deductor Due date Remarks
Normal Deductor

(Other than the Government Office)

Within 7 days of the following month in which TDS is deducted. Time limit applicable for the months of April to February
On or before 30th April in case of income credited or paid in the month of March Time limit applicable for the month of March
Government Office Same day In case the tax deducted has been paid without the production of the challan
Within 7 days of the following month in which TDS is deducted. In case the tax paid is accompanied by an income tax challan.

Amount of penalty payable under section 271C of Income Tax Act, 1961

In case of default, the penalty under section 271C is leviable to the extent of an amount equal to TDS not deducted / not paid.

FAQs on section 271C of Income Tax Act, 1961

Q 1. What is Chapter XVIIB?

Ans: Chapter XVII of the Income Tax Act covers provisions relating to ‘Collection and recovery of tax’. Part B of Chapter XVII (i.e. Chapter XVIIB) covers all the sections relating to ‘Deduction at source’.

Q 2. Is TDS deduction mandatory?

Ans: Yes, in case the TDS provisions are applicable, then it is mandatory for the deductor to deduct the TDS.

Q 3. What is the penalty for not deducting TDS?

Ans: As per provisions of section 271C of the Income Tax Act, in case the deductor fails to deduct the TDS, then he would be liable to pay an amount equal to TDS not deducted.

Read Also:-

S. No. Title
1 Section 272BB Penalty for failure to comply section 203A provisions
2 Section 272B Penalty for failure to comply with provisions of PAN
3 Section 272AA Penalty for failure in complying with provisions of section 133B
4 Section 272A Penalty for failure to answer questions or furnish information / returns/ statements or allow inspections etc
5 Section 271J Penalty on professionals for furnishing incorrect information in reports / certificates
6 Section 271I Penalty for failure in furnishing Form 15CA & Form 15CB
7 Section 271H Penalty for late filing/non-filing of TDS or TCS return
8 Penalty for failure in furnishing report or furnishing inaccurate report under section 286 – Section 271GB
9 Section 271GA Penalty for failure in furnishing the information / document in Form 49D as required under section 285A
10 Section 271G Penalty for failure to furnish information / document as per provisions of section 92D
11 Section 271FB Penalty for default in furnishing return of fringe benefits
12 Section 271FAB Penalty for failure to furnish statement / information / document by an eligible investment fund
13 Penalty for providing inaccurate statement of financial transaction or reportable account- Section 271FAA
14 Section 271FA Penalty for failure in furnishing statement of financial transactions or reportable account
15 Section 271E Penalty for contravening provisions of section 269T
16 Section 271DB | Penalty for contravening provisions of section 269SU
17 Section 271DA Penalty for contravening provisions of section 269ST
18 Section 271CA Penalty for failure to collect tax at source (TCS)
19 Section 271D Penalty for contravening provisions of section 269SS
20 Section 271C Penalty for failure / non-deduction / non-payment of TDS
21 TDS Rate Chart for AY 2020-21 and AY 2021-22
22 Section 271BA Penalty for failure to furnish section 92E report
23 Section 271B Penalty for failure to get accounts audited
24 Section 271AAC Penalty in respect of certain specified income
25 Section 271AA Penalty for failure to maintain Transfer Pricing documents
26 Section 271A Penalty for failure to keep / maintain or retain books of accounts, documents
27 Section 270A(1) Penalty for under-reporting & misreporting of income
28 Section 269SU Acceptance of payment through electronic modes
29 Section 234F Late fees for default in filing of income tax return
30 Section 234E Late Fee for default in filing of TDS / TCS returns
31 Section 158BFA(2) – Penalty on undisclosed income for block period
32 Section 140A(3) Penalty for non-payment of self-assessment tax

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