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Consequences on late deposit of TDS and late/wrong filing of TDS Return

Consequences on late deposit of TDS

Interest is chargeable on short payment/late payment of TDS. There can be following scenarios :-

1) When TDS is not deducted
Interest at the rate of 1% per month or part thereof, for the period from the date on which TDS is deductible/collectible to the date on which TDS/TCS is actually deducted/collected.

2) When TDS is deducted but not paid
Interest at the rate of 1.5% per month or part thereof, for the period from the date on which TDS is actually deducted/collected to the date on which such TDS/TCS is actually paid.

Calendar month is considered in calculating interest therefore if you delay payment by one day, you have to pay interest for two months. For example, if TDS is deducted in month of July and deposited on 8th of August then you have to pay interest for 2 month i.e. July and August. Total interest payable shall be 3%.

Notes – Interest on late payment can be paid before furnishing TDS return or after demand raised by Traces. Such interest can be adjusted from amount remaining in any TDS Challan (under any section).

Consequences of late/wrong filing on TDS Return

  • Late filing fee of Rs 200 per day under section 234E
    1) Penalty of Rs. 200 per day shall be payable for any delay in furnishing the TDS statement. This penalty is also applicable in case of furnishing form 26 QB which is a challan cum statement in case of purchase of immovable property.
    2) The total late filing fees should not exceed the total amount of TDS made for the quarter.
  • Penalty ranging Rs 10,000 to Rs 1,00,000 under section 271H
    1) Delay in filling TDS statement for more than a year from the due date of filling of such TDS return – If the TDS statement is not filed within one year from the due date of furnishing of TDS return, then a minimum penalty of Rs 10,000 (which can go upto Rs 1,00,000) can be levied. The penalty under this section will be in addition to the late filing fee u/s 234E.2) furnishing incorrect details in the statement filed like PAN, Challan and TDS Amount etc – Section 271H also cover cases of filing incorrect TDS/TCS return. Similarly minimum penalty of Rs 10,000 (which can go upto Rs 1,00,0000) can be levied.

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