Penalty for TDS/TCS Returns

Last updated on July 31st, 2022 at 11:07 am

Penalty for TDS/TCS Returns

A penalty under section Section 271H of the Income Tax Act,1961 shall be levied for failure to furnish the TDS/TCS returns.

When penalty u/s 271H be levied?

A penalty under section 271H shall be levied if

⇒ The taxpayer fails to furnish the TDS return or TCS return within the prescribed due dates.

⇒ The taxpayer furnishes incorrect information in the TDS return or TCS return.

Who can levy the penalty u/s 271H?

If the taxpayer fails to furnish the TDS/TCS return within due dates or furnishes incorrect information in the TDS/TDS return then the Assessing Officer may direct the taxpayer to pay penalty u/s 271H.

What is the quantum of penalty u/s 271H?

Minimum penalty is Rs 10,000/-

Maximum penalty is Rs 1,00,000/-

Note: Penalty u/s 271H will be in addition to late fees u/s 234E.

Is there any relief/relaxation from penalty u/s 271H?

As per section 271H(3) of the Income Tax Act,1961

If the taxpayer proves all the following conditions are satisfied then no penalty u/s 271H will be levied for delay in furnishing the TDS/TCS return.

⇒ TDS/TCS is paid to the credit of the Government.

⇒ Late fees is paid to the credit of the Government.

⇒ Interest (if any) is paid to the credit of the Government.

⇒ TDS/TCS return is filed within 1 year from the prescribed due date.

Note: No relief from penalty u/s 271H will be provided in case the taxpayer has furnished incorrect information in TDS/TCS return.

As per section 273A(4) of the Income Tax Act,1961

If the assessee applies to the Principal Commissioner of Income-tax or Commissioner of Income-tax for seeking relief from penalty u/s 273A(4).

If based on the above application, the Principal Commissioner of Income-tax or Commissioner of Income-tax can reduce or waive the amount of penalty payable only upon being satisfied and recording his reasons for providing the relief.

• It would cause genuine hardship to the assessee considering the circumstances of the case.
• The assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.

As per section 273B of the Income Tax Act,1961

If the taxpayer proves that there was a reasonable cause for failure then immunity from penalty will be provided in genuine cases

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CA Ankita Khetan

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Chartered Accountant in practice, DipIFRS (from ACCA, UK), Post Graduate in Commerce, Certified Independent Director (from IICA), and holds a certification in Forex and Treasury Management course (by ICAI).

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