What Is the Penalty for TDS in India?
What Is the Penalty for TDS in India?
TDS Late Filing, Non-Payment & Wrong Filing Penalties | FY 2024–25
TDS (Tax Deducted at Source) is a key part of India’s tax structure. If you’re a deductor—whether an employer, tenant, business owner, or property buyer—you’re legally required to deduct, deposit, and report TDS correctly and on time.
But what happens if you don’t?
“What is the penalty for late filing, non-payment, or incorrect TDS returns?”
Here’s a detailed guide to help you understand the consequences under the Income Tax Act.
✅ What Are TDS Compliance Requirements?
If you deduct TDS, you must:
1. Deduct it at the correct rate
2. Deposit it with the government within the due date
3. File TDS returns quarterly in the correct format
4. Issue TDS certificates (Form 16/16A) to deductees on time
Failure to comply with any of these leads to penalties, fees, and interest.
📌 Types of TDS Penalties and Charges
1. 🕒 Late Filing Fee – Section 234E
• ₹200 per day of delay
• Applies from the due date till the actual date of filing
• Maximum fee = total TDS amount deductible
📌 Note: This is a mandatory fee—you must pay it before filing the late return.
Example:
Due date: 31 July
Filed on: 10 August
Delay = 10 days
Fee = ₹200 × 10 = ₹2,000
2. ❌ Penalty for Non-Filing or Wrong Filing – Section 271H
• ₹10,000 to ₹1,00,000
• Imposed if:
o You don’t file the return at all
o You file a return with incorrect PAN, challan, or TDS amount
💡 However, you may avoid this penalty if:
• You file the return within 1 year of the due date,
• All TDS is deposited with interest and a late filing fee paid, and
• There’s no willful default
3. 💸 Interest on Late Deduction or Payment – Section 201
This is charged in two scenarios:
a. TDS not deducted at all:
• Interest @ 1% per month
• Calculated from the date payment is made till the date TDS is deducted
b. TDS deducted but not deposited:
• Interest @ 1.5% per month
• From the date of deduction to the actual payment date
📌 Even one day’s delay is treated as a full month for interest calculation.
4. 🧾 Disallowance of Expenses – Section 40(a)(ia)
For businesses, if TDS is not deducted or deposited:
• 30% of the expense on which TDS was required may be disallowed as a deduction while computing taxable income
This results in higher taxable profits, leading to more income tax payable.
5. 🚫 Prosecution – In Serious Cases
Under Section 276B, failure to deposit TDS can lead to:
• Rigorous imprisonment (3 months to 7 years)
• Fine, if proven that the default was willful
📅 TDS Return Due Dates (FY 2024–25)
| Quarter | Period | Due Date |
| Q1 | April – June | 31st July 2024 |
| Q2 | July – September | 31st October 2024 |
| Q3 | October – December | 31st January 2025 |
| Q4 | January – March | 31st May 2025 |
✅ Final Words
Failing to comply with TDS rules can lead to hefty interest, penalties, disallowance of expenses, and even prosecution in extreme cases.
To stay compliant:
• Deduct and deposit TDS on time
• File quarterly returns accurately
• Validate all deductee PANs
• Use approved software or consult a CA to avoid errors
