Time Limit to Deposit TDS/TCS Liability: Late Fee, Penalties

February 10, 2020
Direct Taxation
CA. Kavit Vijay

No filing or late filing of TDS/TCS return can take you into a wholesome of troubles. As the taxation rules suggest, taxpayers come under two penalties in case of non-filing of TDS returns or statements.

The first penal consequence the taxpayer will have to face comes under section 234E (Fee for default in furnishing statements), and the second one falls under section 271H (Penalty for failure to furnish statements).

However, you will have to pay the late filing fee and interest as well in case of late filing.

Here in this article, we are going to discuss all the important aspects of TDS/TCS return. While doing so, we are going to talk about the due dates, penalties, and consequences businesses might have to face in case of no filing, or late filing of TDS or TCS returns.

Before we talk more about the out-turn, let’s go through the basic liabilities,

1. Duties of a Taxpayer Liable to Deduct/Collect Tax At Source

Firstly, you will have to obtain a Tax Deduction Account Number or Tax Collection Account Number and quote them in all your documents related to TCS/TDS return.
Then, you need to collect or deduct the tax amount at source at the exact rate applicable
Next thing that comes is paying the Government the tax credit deducted or collected
Ensure quarterly filing of TDS or TCS return statements
Issuing certificate with respect to the amount deducted or collected

2. Due Dates For Filing TDS/TCS Return

As per the Government notifications here are the due dates of filing TCS/TDS return in different quarters of the any Financial Year are as follows:

End of the Quarter	Due Dates for Filing TDS Return (For Government and other deductors)	Due Dates for Filing TCS Return
30th June	31st July	15th July
30th September	31st October	15th October
31st December	31st January	15th January
31st March	31st May	15th May

3. Important Facts on TDS/TCS Return

In the last announced Budget 2019, the TDS limit got a hike. The TDS limit on Post Office Savings and Bank deposit have become Rs. 40,000 from Rs. 10,000 now.
The TDS threshold has gone up to Rs. 2,40,000 from Rs. 1,80,000 for deduction of tax on rent

As said earlier, you are liable to face certain consequences like late fees, interest on the tax amount, and penalties because of non-filing of TDS or TCS return. Here, we have discussed all the out-turn.

4. Late Filing Fees on TDS/TCS Return

As the section 234E of the Taxation rule suggests, you need to pay a fine of Rs. 200 per day until you file the return. Though the late filing fee applies on an everyday basis, However the maximum penalties for not filling TDS return can not be more than actual TDS liabilities.

e.g., Suppose on a certain quarter you are liable to pay an amount of Rs. 10000 as TDS.

Due date of furnishing TDS return for quarter-1	31st July
Date of actual filing of TDS return	5th Feb
Delay	189 Days
Penalty on the basis of delay	189*200= INR 37,800/-
Maximum Cap for the penalty	INR 10,000

In the above example, suppose the deadline for filing the tax return was 31st July, but you are paying the amount on 5th February. Hence the total no. of days of delay is 189 days. Thus the late fee amount becomes Rs. 200 x 189 = Rs.37800. But as per the rule, you don’t need to pay Rs 37,800 as of late fees. Since the amount has crossed the maximum TDS liabilities of Rs. 10,000 you need to pay Rs. 10,000 only as late fee.

5. Interest on Late deposit fo TDS/TCS Liabilities

Alongside the late fees, you will have to pay interest calculated on the amount. Follow the table below to get the exact detail.

Section	Default type	Interest Payable	Period
201A	Non-deduction of Tax at source in whole or in part	1% per month*	From the date on which the tax was supposed to get deducted to the date on which the tax actually got deducted
	Non-payment of tax after deduction either in whole or in part	1.5% per month*	From the date of deduction to the date of payment

* For this calculation, for part of the month, interest is payable for the whole month.

E.g.

Delay in Deduction of TDS

Amount of TDS	10000
Due date of deduction of TDS (Date of credit in books or date of payment, whichever is earlier	15th April 2019
Actual Date of deduction of TDS	20th September 2019
Due date of deposit of TDS to the account of government	7th October 2019
Date of payment of TDS	30th November 2019
Delay in deduction	6 Months (For part of the month, interest is levied for the whole month)
Interest for Delay in deduction	100001%6=600
Delay in Deposit	3 Months
Interest for Delay in deposit	100001.5%3= 450
Total Interest	1050

6. Penalties under TDS/TCS Return

You may have to pay the penalty of an equal amount that you have failed to deduct, collect or remit in case of no filing of TDS returns.

6.1 Prosecution under Section 276B of Income Tax Act

As the 276B of the Income Tax Act, 1961 suggests if a person fails to pay deducted TDS to the credit of the Central Government within the due date, he shall be punished with rigorous imprisonment for a term of 3 months to 7 years along with fine.

6.2 Late Fee under section 234E

You need to pay a late fee of Rs. 200 per day for the period from the due date of filing of TDS return till the date of filing of return. as the section 234E lays down. However, the amount will not be more than Rs. 5000.

6.3 Penalty under section 271H

The assessing officer can impose a fine of Rs. 10000 to Rs. 100000 as a penalty in case of non-filing of TDS return within the due date.

Note: Penalty under section 271H is in addition to the late fee mentioned under section 234E. Alongside, the taxation rule under section 271H also applies in case of incorrect filing of TCS/TDS returns.