Penalty on Failure or Late Payment to Deposit TDS

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. In this article, we will discuss time limit to deposit TDS and penalty on failure or late payment to deposit TDS.

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Time Limit to Deposit TDS

To deposit TDS, there are some limits fixed by Income tax department. Deductor must deposit witin the prescribed time limit otherwise he has to pay the penalty. The time limit to deposit is different from category wise as given below.

TDS on behalf of Government

TDS shall be deposited on the same day as if deducted on behalf of government deductee.

For other deductee/payee

Deducter will deposit TDS within 7 days from the last date of the month in which the deduction is made. This time limit may be not applicable when the TDS deducted on the month of March. Then the time limit will be up to 30th April.

It is because of load of work due to the closing date of financial year.

TDS on value of Perquisites

The time limit in the case of TDS on value of perquisites will be 7 days from the end of month in which such tax is due.

By approval of Assessing Officer

The time limit may be quarterly, i.e. 7th July, 7th Oct, 7th Jan and 30th April. In other words, deductor can deposit total TDS of three months on 7th of next month. But deductor must get approval of Assessing officer. The assessing officer has the discretionary power to allow it or not.

The above time limit is common for all specified payments on which TDS has to be deducted. It is immaterial on which type of payment TDS has deducted.

Penalty on failure to deposit TDS with in Prescribed Limit

If employer/deductor/payer fails to deposit TDS within the time limit as mentioned above,  then he is liable to pay interest penalty @ 1.5%  for every month or part of the month from the date of deduction. (w.e.f. 1st July, 2010 by Finance Act 2010). 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 on failure to non-deposit of TDS

The employer/deductor/payer will be treated as “assesse in default.” So he is liable to pay the amount equal to TDS liability (Which he has not paid) with interest. Punishment provisions is also there in Income Tax Act.

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    • Deduct tax immediately and deposit with interest @ 1% for the months of delay in deduction (i.e. from the date of payment to the person to the date of deduction). Also deposit the TDS immediately, otherwise you have also needs to pay interest on late deposit of TDS. Accordingly revise your tds return also.

  1. there’s system failure due to which i am unable to pay tds via e-payment.
    Will the late payment still be in interest column?

    • Its better to ask these kind of questions to your CA. He is better equipped to answer these questions after understanding all facts of your case. Asking these questions on net, in my humble opinion, may be detrimental to you.

      CA. Deepak Bholusaria

  2. Tds we have deducted every month but we have to pay the every month 7th.But for the month of March what shall be the due date I will be 7 th April or 30th April

  3. Suppose i have deducted the TDS and deposited the same on time, but under different section. Like i have to deposit 10% but i deposited 2% and also filled the ITR after that a case arise. Is it a non payment / delay of payment/ or what?

  4. Hi
    I have received letters from Income Tax department (TDS) regarding interest on late payment & late filing for Q1 (Rs1370/-) and Q2 (Rs450/-) as on 6/08/2015 & 29/10/2015 respectively.
    But I have not yet paid both the amount. Now I want to make online payment. So, what would be the nature of payment in Challan 281?
    N.B: I have deducted TDS on a/c 94C (Payment contractor & sub contractor).

    Kindly help.

    Motiulla, Kolkata

  5. Sir, A Pvt. Ltd. Co raised a jobwork Bill for Rs. 106378 on dt. 08.09.2015. But we are failed to deduct TDS & Retun. Now Suggest how to filed Return with Late Interest

  6. Monthly TDS payment date is 7th of every month and if there is government holiday on 7th and we make payment on 8th of that month then is there any requirement to pay interest on TDS ?