Defaults and consequences related to Tax Deducted at Source (TDS) under Chapter XVII-B of Income Tax Act, 1961

Defaults related to Tax Deducted at Source

Chapter XVII-B casts several obligations on the assessee or the person responsible for payment with respect to collection and recovery of tax Deducted at Source. The following constitute default under various provisions of the chapter:

1. Failure to deduct the whole or part of the Tax at source (this include non-deduction, short deduction or delay in deduction) From Section 192 to Section 196D. This also include obligation to deduct at higher rate of 20% where payee fails to furnish PAN or furnishes declaration in Form 15H/15G without PAN as required by section 206AA

2. Failure to deposit whole or part of the TDS (this include non-deposit, short deposit or late deposit) in accordance with the provisions of section 200

3. Failure to furnish, TDS Statements as required by section 200

4. Failure to issue TDS certificates as per section 203

5. Failure to issue statement of perquisite or profit in lieu of salary in Form 12BA

5. Failure to apply for TAN within the prescribed time limit or failure to quote TAN as required under section 203A.

6. Failure to deliver or cause to be delivered a copy of declaration in form no. 15H, 15G to PrCIT/CIT within time prescribed under section 197A(2)

7. Failure to mention the PAN of the deductee in all quarterly statements and TDS Certificates as prescribed under section 139A(5B)

Consequences of Defaults related to Tax Deducted at Source

The non compliance of the provisions of the Chapter XVII-B makes the assessee or the person responsible to the following consequences which include penal interest, late fee, penalty and prosecution:

Default	Section	Consequence	Quantum
Failure to deduct/to deduct at rates prescribed	201(1)	Demand	Amount of tax deductible
	201(1A)	Interest	@1% pm of tax deductible
	271C	Penalty	Equal to amount of tax
Failure to deposit tax deducted at source	201(1)	Demand	Amount of tax not deposited
	201(1A)	Interest	@1.5% pm of tax deducted
	276B	Prosecution	Rigorous imprisonment from 3 months to seven years plus fine
Failure/delay in furnishing TDS Statements	234E	Late Fee	Rs. 200/- for every day of delay but not exceeding tax deductible
	271H	Penalty	Between Rs. ten thousand to Rs. one lacs
	272A(2)(k)	Penalty	Rs. 100/- for every day of delay but not exceeding tax deductible
Failure to deliver declaration in form 15G/15H to CIT	272A(2)(f)	Penalty	Rs. 100/- for every day of delay but not exceeding tax deductible
Failure to issue TDS Certificates	272A(2)(g)	Penalty	Rs. 100/- for every day of delay but not exceeding tax deductible
Failure to issue statement of perquisite or profit in lieu of salary	272A(2)(i)	Penalty	Rs. 100/- for every day of delay but not exceeding tax deductible
Failure to apply/quote TAN	272BB	Penalty	Rs. Ten Thousand
Failure to mention the PAN of the deductee in TDS Statements/Certificates	272B	Penalty	Rs. Ten Thousand
Note: Apart from the above, the failure to deduct /pay also causes:- (a) Disallowance of expenditure u/s 40(a)(ia) (b) Creation of a charge on the assets of the person u/s 201(2)

Also Read:
Chartered Accountant Certificate Form 27BA, 26A-When assessee not treated in default Click Here >>
Meaning and consequences of assessee in default as per Income tax Act, 1961 Click Here >>