Penalty for Late Filing of TDS Return

What is TDS Return?

While deducting Tax Deducted at Source (TDS) is the first step in the compliance chain, the government needs a formal record of these transactions. This official reporting mechanism is known as the TDS Return.

In essence, a TDS return is a comprehensive quarterly statement submitted to the Income Tax Department. This statement provides a summary of all TDS-related transactions conducted by the deductor during that quarter. It matches the amount of tax deducted from various payments with the amount deposited to the government’s account. This process can be illustrated with the help of the following example.

Suppose, the deductor has an invoice bill of ₹65,000. Let us see how the deductor will calculate the TDS return:

After deducting and depositing this ₹6,500 with the government, the deductor must report this transaction, along with the PAN of both parties, the date, and the nature of the payment, in their quarterly TDS return. Filing this return correctly and on time is a non-negotiable legal requirement, the failure of which attracts penalty for late filing of TDS return.

Forms for Filing TDS Returns

There are different TDS return forms that can be used, depending on the nature of the deductor and deductee. The most common forms are:

Form 24Q

When it comes to TDS, Form 24Q is one of the most critical components for filing a TDS return on time. This form is used to file a quarterly statement of TDS deducted from salaries. It is filed by employers to notify the details of TDS deducted and deposited on behalf of their employees. Both online and offline submissions are accepted for Form 24Q, which is divided into two sections:

Form 26Q

This form is used to file a quarterly statement of TDS deducted for non-salary payments. It is filed by individuals or entities responsible for deducting TDS on payments like rent, professional fees, or contract payments.

Form 27Q

This form is used to file a quarterly statement of TDS deducted for payments to non-resident Indians (NRIs) and foreign entities. It is filed by people or entities who make payments to foreign entities or NRIs and deduct TDS on such payments.

Due Dates of Filing a TDS Return

To maintain full compliance and avoid a penalty for late filing of TDS return, it is important to distinguish between two separate sets of deadlines: the due date for depositing the tax with the government and the due date for filing the TDS return. Both have distinct timelines that must be strictly followed.

Due Dates for TDS Deposit

This is the deadline for depositing the tax you have deducted to the government’s account.

• For April to February: The tax deducted in any given month must be deposited by the 7th of the following month.
• For March: The deadline for deductions made in March is extended to April 30th of the next financial year.

Due Dates for Filing TDS Return

A TDS return is filed on a quarterly basis to provide a consolidated statement of all TDS transactions. The due date is the last day of the month immediately following the end of the quarter. An extended timeline is provided for the final quarter of the financial year.

Here are the due dates for filing TDS returns for Forms 24Q, 26Q, 27Q etc. for the financial year 2025-26:

Adhering strictly to both sets of deadlines is essential to avoid the interest, late fees, and TDS return penalty imposed by the Income Tax Act.

TDS/TCS Returns Late Filing Penalty

No matter how punctual you are, there can be scenarios where you are late for filing your TDS/TCS returns. In that case, you are required to abide by the penalty rules set by the Income Tax Department. Take a look at the TDS late payment penalty:

Section 276B And Prosecution

Suppose you fail to pay to the Central Government’s credit. In that case, you can be punished with harsh imprisonment for a time not less than three months and not more than seven years with a penalty for the tax deducted at source as necessary by or under the requirements of Chapter XVII-B.

Section 234E And Late Fee

A penalty of ₹200 per day will be imposed if the TDS report is not submitted on time. If you miss filing Form 26 QB, which is a challan cum statement in the instance of immovable property acquisition, you may be fined. The total TDS made must not exceed the total TDS late filing fees for the quarter.

Section 271H And TDS Penalty Amount

If the TDS report is not submitted within one year of the given deadline by the government for the TDS return, a minimum fine of ₹10,000 that can go up to ₹1,00,000 can be imposed. This penalty would be in addition to the late filing charge imposed by section 234E.

TDS Penalty Exception To Section 271H

Section 271H also covers incidents of submitting inaccurate TDS/TCS returns by providing wrong information in the statement submitted, such as PAN, Challan, and TDS Amount. A minimal penalty of ₹10,000 that can be increased to ₹1,00,000 can be imposed.

In order to get the most out of your TDS return, it is critical that you do not miss any deadlines in order to avoid prosecution and penalties.

What is the Penalty for Late Payment or Non-Payment of TCS?

If a person fails to collect tax at source (TCS) or collects TCS but fails to deposit it to the government within the prescribed due dates, they are liable to pay interest on the TCS amount. The interest rate is 1% per month or part thereof. The tax collector is accountable for paying interest from the date on which the tax was collectable to the date the tax was actually paid.

For example, if a person fails to deposit TCS of ₹10,000 within the due date, they will be liable to pay interest of ₹100 per month. The interest will continue to accrue until the tax is actually paid. The interest on late TCS payments is in addition to any penalty that may be imposed by the Income Tax Department.

Wrapping it Up

TDS is an important compliance requirement for employers and other deductors. It is important to file returns on time and accurately to avoid a penalty for late filing of TDS return. The penalties for late filing or inaccurate TDS returns can be significant, from delaying the ability of employees and vendors to receive credit for their paid taxes and process legitimate TDS refund claims, so it is important to take the time to get it right. Filing these taxes on time can help build a strong financial profile that can be helpful in the future. So always file your returns on time to avoid any penalties and benefit from the different schemes provided by the government.

FAQS on Penalty for Late Filing of TDS Return