Fees & Penalty for late/Non-filing of TDS Return

No filing or late filing of TDS/TCS returns can get you into trouble. As tax laws suggest, taxpayers fall under two penalties in the event of non-fulfillment of TDS refunds or statements. The first penalty that the taxpayer will have to face comes from under section 234E (Payment for failure to provide statements), and the second falls under section 271H (Penalty for failure to provide statements). However, you will need to pay the late filing fee and interest in the event of late payment. This article will discuss the TDS penalty for late payment.

Forms to file TDS Returns

• Form 24Q- Quarterly TDS statement of tax-deductible on income payments.
• Form 27Q- Quarterly TDS statement of tax-deductible when paid, excluding salary, non-resident (non-corporate), and third party.
• Form 26Q- Quarterly TDS statement of other cases such as TDS deducted from professional payments, interest payments, etc.

However, if the tax is deducted from a source under Section 194-IA and 194-IB, the taxpayer will provide a challan-cum-statement on Form 26QB and Form 26QC, respectively. The cashier must provide a challan-cum-statement within 30 days from the end of the month in which TDS is held. In contrast, no return is required separately in such cases.

Duties of Taxpayer to collect/deduct tax at source

• First, you will need to get your Tax Deduction Account or Tax Collection Account Number and quote them from all your TCS/TDS return documents.
• Then, you need to collect or deduct the tax amount from the source at the exact effective value
• The next step is to pay the Government a tax deduction deducted or collected
• Ensure quarterly submission of TDS or TCS statements
• Issuing a certificate of the amount deducted or collected.

Interest

Provision of Interest on late deduction of TDS or late payment of TDS is defined in Section 201 (1) of the Income Tax Act, 1996:

• Interest on late TDS deduction: Assessee is liable to pay @ 1% monthly interest or partial monthly payment on the TDS amount from the due date to the actual date of the deduction.
• Interest on late payment of TDS: The assessee is liable to pay interest @ 1.5% monthly or half of the monthly amount on the TDS amount from the due date of deduction until the actual date of deduction.

TDS penalty for late payment 

You may be required to pay a fine equal to the amount you failed to withdraw, collect or deduct if there is no return for TDS return.

• Prosecution under Section 276B of the Income Tax Act: As 276B of the Income Tax Act, 1961 stipulates that if a person fails to pay TDS deducted from a Central Government credit within a specified date, he or she will be liable to imprisonment for a maximum of 3 months to 7 years with a fine.

• The late fee under section 234E: You are required to pay a late fee of Rs. 200 per day for the period from the due date of TDS return to the date of return as section 234E lays down. However, the late fee charge will not be more than Rs. 5000.

• Penalty under section 271H: The inspecting officer may charge a fine of Rs. 10000 to Rs. 100000 as a penalty in the event of non-filing of the TDS return within the due date.

Note: Fees under section 271H add to the late fee specified under section 234E. Accordingly, the tax law under section 271H also applies in the event of incorrect filing of TCS/TDS returns.

Final words

Every assessee with a deducted TDS will be required to file his/her TDS return. These returns must be submitted after certain time intervals, and the information to be submitted to income tax authorities includes TAN (Tax and Collection Account Number), deducted amount, Permanent Account Number (PAN), TDS payment, type of payment, etc. There are late payment costs for TDS returns so it is important to remember the deadlines and the correct documents required.