Consequences of TDS defaults

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Failure to deduct taxes or wrong deduction of TDS (non deposit, short deposit or late deposit):

Default/ Failure Section
Nature of Demand Quantum of demand or penalty

Failure to deduct tax at source

201(1) Tax demand Equal to tax amount deductible but not deducted
201(1A) Interest @1 % p.m. of tax deductible
271C Penalty Equal amount of tax deductible but not deducted
Failure to deposit tax at source 201(1) Tax demand Equal to tax amount not deposited
201(1A) Interest @1.5% p.m. of tax not deducted
276B Prosecution Rigorous imprisonment for a term for a minimum of 3 months which may extend to 7 years and with fine
Failure to apply for TAN No. u/s 203A 272BB Penalty Rs. 10000
Failure to furnish prescribed statements u/s 200(3) 272A(2)(k) Penalty Rs. 100 every day during which the failure continues subject to maximum of TDS amount
Failure to issue TDS certificate u/s 203 272(A)(g) Penalty Rs. 100 every day during which the failure continues subject to maximum of TDS amount.
Failure to furnish statement of perquisite or profit in lieu of salary u/s 192(2C) 272(A)(i) Penalty Rs. 100 every day during which the failure continues subject to maximum of TDS amount
Failure to mention PAN of the deductee in the TDS statements and certificates 272B Penalty

Rs. 10000

If TDS return is not filed within the specified due dates being 31st January, 2018 for the 3rd quarter corresponding to FY 2017-18, the major consequences would be levy interest.

However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and HUF, only if the turnover or professional receipt exceeds sum of Rs. 1 Crore or Rs. 25 Lacs respectively in previous year, there is a requirement to deduct tax at source.

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