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).
The penalty under section 271C is applicable under the following conditions –
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.
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 –
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|
(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.|
In case of default, the penalty under section 271C is leviable to the extent of an amount equal to TDS not deducted / not paid.
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.
|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|