Every deductor (Who deduct TDS on behalf of a payee) has the duty to deposit TDS within the prescribed limit to the account of Income Tax department as per rules by Income Tax Act. Section 200 of Income Tax Act relates to depositing in many ways.
Where a persons fails to deduct or pay tax, he shall be liable to pay penalties as per income tax act.
In this article, we will discuss time limit to deposit TDS and penalty on failure or late payment to deposit TDS.
Interest on Late Payment or Non Deduction of TDS
- When fails to deduct TDS – 1% p.m. from the date tax was deductible to the date on which such tax is deducted.
- When fails to deposit TDS – 1.5% p.m. from the date on which such tax is deducted to the date on which such tax is actually
According to Income Tax Act, Interest is not a penalty so it cannot be waived off. The payment must be paid for the failure or late deposit of TDS.
Penalty or Fee for Late filing of TDS Returns
Where a persons fails to submit TDS returns with the time (Check due dates to file TDS Return here), he shall be liable to pay a sum of Rs. 200 for every day during which the failure continues. (u/s 234E)
However, the amount of fee or penalty shall not exceeds the amount of tax deductible.
For Example: If penalty/fee is Rs. 3000 but TDS is Rs. 2000 then you have to pay Rs.2000.
Penalty or Fee for Non-Filing of TDS Return
If a person fails to submit TDS return or submit incorrect returns, he shall to pay Rs. 10,000 which may extend up to Rs.1,00,000. (u/s 271H)
However, the above penalty u/s 271H will not be levied in the following cases.
- If the person proves that he paid TDS along with interest and fees.
- If the person proves that he submit TDS return before the expiry of a period of one year form the time for delivering such TDS return.