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/ FailureSection
Nature of DemandQuantum of demand or penalty

Failure to deduct tax at source

201(1)Tax demandEqual to tax amount deductible but not deducted
201(1A)Interest@1 % p.m. of tax deductible
271CPenaltyEqual amount of tax deductible but not deducted
Failure to deposit tax at source201(1)Tax demandEqual to tax amount not deposited
201(1A)Interest@1.5% p.m. of tax not deducted
276BProsecutionRigorous 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 203A272BBPenaltyRs. 10000
Failure to furnish prescribed statements u/s 200(3)272A(2)(k)PenaltyRs. 200 every day during which the failure continues subject to maximum of TDS amount
Failure to issue TDS certificate u/s 203272(A)(g)PenaltyRs. 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)PenaltyRs. 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 certificates272BPenalty

Rs. 10000

If TDS return is not filed within the specified due dates being 31st January, 2019 for the 3rd quarter corresponding to FY 2018-19, 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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