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. 200 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 |
For example, If TDS return is not filed within the specified due dates being 31st January, 2021 for the 3rd quarter corresponding to FY 2020-21, the major consequences would be levy interest.
However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J (a & b) 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.