Introduction
Tax Deducted at Source (TDS) ensures timely tax collection by deducting tax at the point of payment. However, failing to file TDS returns on time can lead to penalties under Sections 234E and 271H of the Income Tax Act. In this article, we will explore the penalties, late fees, interest charges, and legal consequences of delayed TDS filings and payments.
TDS Return Due Date & Late Filing Fees (Section 234E)
A delay in filing TDS returns beyond the due date attracts a fee of ₹200 per day. This fee applies from the due date until the date of filing but cannot exceed the total TDS deducted.
📌 Example: If ₹5,000 was deducted as TDS and the return is delayed by 109 days, the calculated fee is ₹21,800 (₹200 × 109 days). However, since this exceeds the TDS amount, the penalty is capped at ₹5,000.
TDS Return Due Dates for FY 2024-25
| Quarter | Period | TDS Return Due Date |
|---|---|---|
| Q1 | April – June | 31st July |
| Q2 | July – September | 31st October |
| Q3 | October – December | 31st January |
| Q4 | January – March | 31st May |
Penalty for Late Filing (Section 271H)
In addition to the late fee, a penalty ranging from ₹10,000 to ₹1,00,000 may be imposed if:
- The TDS return is filed more than one year after the due date.
- The return contains incorrect information.
📌 Exception: The penalty may not be levied if the TDS is paid, applicable interest and late fees are cleared, and the return is filed within one year of the due date.
Interest on Late Deposit of TDS
If the deducted TDS is not deposited on time, interest is charged as follows:
| Type of Delay | Interest Rate | Period of Interest Calculation |
| Delay in Deduction | 1% per month | From the date tax was deductible to the date it was deducted. |
| Delay in Deposit | 1.5% per month | From the date of deduction to the date of deposit. |
📌 Note: Interest must be paid before filing the TDS return to avoid further penalties.
Prosecution for TDS Non-Compliance (Section 276B)
Failure to remit the deducted TDS to the government can result in rigorous imprisonment ranging from 3 months to 7 years, along with a fine.
How to Avoid Penalties?
✅ Deduct TDS accurately as per applicable rates. ✅ Deposit the deducted TDS within the stipulated time. ✅ File TDS returns before the due date to avoid late fees and penalties. ✅ Ensure correctness of details while filing returns to avoid rejection or further penalties.
Conclusion
Late filing of TDS returns can lead to substantial penalties, interest charges, and legal consequences. To remain compliant, businesses must deduct, deposit, and file TDS returns on time. If you need assistance with TDS return filing, payment, or compliance, consult Saptax Hub LLP – Your Trusted Chartered Accountant Firm in Delhi for expert tax advisory and support.
