Penalty for Late & Non Filing of TDS Returns [Latest Amendments]

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.

Check Time Limit to Deduct TDS and 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.
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  1. Hi,

    I am a NRI and have bought an under construction apartment for the total cost of around Rs. 51 lakhs from a builder in 2014. I have paid multiple installments since 2014 without deducting TDS. Total amount of installments paid up till now is Rs 48 lakhs. The apartment is almost ready for possession and I am about to make the final payment and want to deduct the TDS now. I have the following questions:
    1. Since I did not pay TDS on the installments since 2014, should I be paying interest and penalty on the unpaid TDS? If so, how is that calculated? And will this interest and penalty come out of my pocket (so I don’t deduct this from the payment which I made to the builder)?
    2. As per my understanding, I have to deduct total TDS of 1% which is Rs 51000. So I should be paying Rs 50,49,000 in total to the builder. Is this correct?
    3. Apart from the cost of the apartment, there are some more charges which the builder is asking at the time of possession (like escalation charge, additional compensation charge, labor welfare charge, etc.). Is TDS also calculated on these or just on the cost of the apartment?
    4. The service tax which I have to pay to the builder, is that calculated on the total cost (51 lakhs) or on cost after deducting TDS (50,49,000)?

    Could you please help with my queries. Appreciate your response.

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