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Penalty for late filing of TDS Returns

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July 6, 2022

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11 mins read

Penalty for late filing of TDS Returns

Serial No. Contents
1. Dates for Filing TDS Returns
2. Legal provisions for Penalty for late filing of TDS Returns

3. Relief from payment of Penalty for late filing of TDS Returns

Dates for filing TDS Returns

Before understanding the penalty for late filing of TDS Returns, it is important to know the due dates, of filing TDS Returns. The table below lists down the  due dates for filing TDS returns, other than the returns required to be filed u/s Section 194 – IA, Section 194 – IB, Section 194M and Section 194S : –

Quarters Due Dates for filing TDS Returns
30th June 2022 31st July 2022
30th September 2022 31st October 2022
31st December 2022 31st January 2022
31st March 2023 31st May 2023

The  due dates for filing TDS returns,  u/s Section 194-IA, Section 194-IB, Section 194M and Section 194S are as under : –

Section – Deduction  of tax for Timelines for payment of TDS
Section 194-IA Consideration for purchase of an immovable property Within 30 days from the end of the month in which tax is deducted in Form 26QB
Section 194-IB For rent paid on an immovable property to an Individual or HUF Within 30 days from the end of the month in which tax has been deducted in Form 26QC
Section 194M Every Individual or HUF responsible for deduction of tax  TDS  statement in Form 26QD shall be required to be filed within 30 days from the end of the month in which tax has been deducted.
Section 194S TDS from payments for the transfer of Virtual Digital Assets Within 30 days from the end of the month in which tax has been deducted.

Legal provisions for Penalty for late filing of TDS Returns

Any person, who fails to file their TDS Returns, within the abovementioned timelines, is liable for the following penal consequences : –

  • Late filing fees under Section 234E ;  and
  • Penalty under Section 271H of  the Income Tax Act, 1961 {hereinafter referred to as the “Act”}.

Let’s take a closer look at these legal provisions: –

Section 234E- Late Filing Fees

According to this provision, any person who fails to file his TDS Return by the due dates for the respective quarters, is liable to pay a late filing fees, which shall be Rs. 200/ day, for every day of continuing default. However  the total late filing fine shall not exceed the total amount of TDS to be paid.

In order to file the TDS Return, one would first have to pay the late fee one is liable to pay, before filing the TDS Return.

Example 1 : –

X Limited,   filed their TDS return for June quarter,  after a delay of 35 days. If the total TDS deducted for return was Rs. 10,000, what is the penalty for late filing of TDS return u/s 234E ?

Solution

Any person who fails to file his TDS Return by the due dates for the respective quarters, is liable to pay a late filing fees, which shall be Rs. 200/ day, for every day of continuing default . For a default of 35 days, the penalty for late filing of TDS return shall be7,000  (35*200).

Example 2: –

X Limited,   filed their TDS return for June quarter,  after a delay of 55 days. If the total TDS deducted for return was Rs. 10,000, what is the penalty for late filing of TDS return u/s 234E ?

Solution

Any person who fails to file his TDS Return by the due dates for the respective quarters, is liable to pay a late filing fees, which shall be Rs. 200/ day, for every day of continuing default . For a default of 55 days, the penalty for late filing of TDS return shall be 11,000 (55*200). However  since the total late filing fine shall not exceed the total amount of TDS (Rs. 10,000), the total penalty shall be Rs. 10,000.

Section 271H – Penalty

Section 234E deals with payment of late filing fees, which is mandatory to be paid in case of default and such amount is calculated on the basis of the duration of the continuing default, provided it does not exceed the TDS to be paid.

Section 271H empowers the Assessing Officer that he may impose a penalty on the defaulting person. Such default not only includes late filing of TDS Returns, but also in cases where TDS Returns have been filed incorrectly by the deductor. The minimum amount of penalty that can be levied is Rs. 10,000, which can go up to Rs. 1,00,000. The amount to be levied shall depend upon the discretion of the Assessing officer and the mitigating circumstances of the situation.

It is to be noted that such penalty is in addition to the late filing fees that the defaulting person has to pay while filing his TDS Returns.

Concession from levy of Penalty u/s 271H

However such penalty may not be imposed on the defaulting person if the following conditions are fulfilled:

  1. The tax deducted/collected at source is credited to the Government.
  2. Late filing fees and interest {if any} is credited to the Government.
  3. The TDS Return is filed before the expiry of a period of one year from the due date specified.

This concession is applicable only if the person has failed to file the TDS Return by the due date of the respective quarters. In case of filing of incorrect TDS Return, the defaulter shall still be liable to pay the penalty under Section 271H of the Income Tax Act, 1961.

Relief from payment of Penalty for late filing of TDS Returns

Apart from the concession provided, there are two other instances where such relief can be sought by the defaulter:

  1. The Principal Commissioner or Commissioner of Income Tax under Section 273A{4} has been given the power to waive off or reduce the penalty levied under the IT Act, once on an application made by the assessee. Such penalty maybe waived off or reduced if the abovementioned conditions have been fulfilled by the defaulter.
  2. The defaulter may be able to get relief from payment of such penalty if he is able to prove, that there was reasonable cause for such failure to file TDS Returns within the given timelines – Section 273B of the Act.

Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

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