TDS Penalty & Interest Guide — Section 201, 271C
All TDS penalties, interest charges, and prosecution risks — for late deduction, late deposit, late filing, and non-deduction under the Income Tax Act.
TDS Penalty & Interest Guide — Section 201, 271C
Prepared by TaxClue's CA/CS team. Updated for FY 2025–26.
Interest for Late Deduction (Sec 201)
1% per month from date tax was deductible to actual deduction date. Computed on tax amount not deducted.
Interest for Late Deposit (Sec 201)
1.5% per month from date of deduction to actual payment date. Even 1 day of delay counts as full month.
Late Filing Fee (Sec 234E)
₹200 per day delay in filing quarterly TDS return, up to the tax amount. No waiver available — auto-charged.
Penalty for Non-Deduction (Sec 271C)
Penalty equal to TDS amount not deducted. Plus interest under Sec 201. Compounding available in some cases.
Prosecution (Sec 276B)
Deducted but not deposited: rigorous imprisonment 3 months to 7 years + fine. Cognizable offence — police can arrest.
Penalty for Non-Furnishing Certificate (Sec 272A)
Failure to issue Form 16/16A: ₹100 per day per certificate, up to TDS amount.
Common TDS Mistakes
Not deducting TDS on contractor payments >₹30,000 (single) / >₹1L (annual). Missing TDS on rent >₹50,000/month (Sec 194-IB). No TDS on professional fees.
How to Avoid Penalties
Deduct TDS at the time of payment/credit (whichever is earlier). Deposit by 7th of following month (31 Mar: by 30 Apr). File returns on time. Use TRACES for corrections.
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