Penalty for Late Filing TDS Return

Penalty for Late Filing TDS Return

What is The Penalty for The Late Filing of a TDS Return?

TDS system is an important aspect of the tax collection system of our country. In the context of systematic management of tax, while the system of payment of tax at the source of income is convenient for the government, it is also very convenient for the income taxpayer. But the File TDS Return Online every three months is also a mandatory obligation of every company or institution in India.  Failure to file a TDS return on time also attracts a penalty.  So let us know about the different dimensions of TDS return.


  1. What’s TDS?
  2. TDS is deducted on which type of income?
  3. On what basis is TDS deducted?
  4. When is it mandatory to deposit TDS?
  5. The last date for depositing the TDS amount and TDS return differs
  6. TDS forms differ depending on the payment
  7. TDS Payment Methods
  8. On late deducting TDS
  9. On the late filing of the TDS return
  10. TDS certificate is also available
  11. Conclusion
  12. FAQs

What is TDS?

TDS is an acronym for Tax Deducted at Source.  In simple words, it can be understood in such a way that from where the income is earned, the tax is deducted at the same place.  A company or an institution deducts tax and deposits it in the account of the Income Tax Department of the government at the time of paying salary, commission, or professional fee to the employees, or professionals.  Tax is deducted in the name of the actual taxpayer only. The amount remaining after tax is paid only to the personnel or professionals.

Click here 👉  Section 194Q – Tax deduction on the purchase of goods and FAQs.

Understand TDS easily with an example:

TDS system can be easily understood with an example.  First of all, it is important to know that 10% TDS is deducted on payment of more than Rs.30,000 regarding the professional fee.  In such a situation, when the company has to pay a fee of one lakh rupees to a professional, then 10% of one lakh i.e., ten thousand rupees, the company will deduct TDS and deposit it with the Income Tax Department in the name of the same professional.  The company will pay the remaining 90 thousand rupees to the concerned professional.

TDS is deducted on which type of income?

  • On payment of salaries of employees.
  • On the interest payable by the bank.
  • On payment of a commission.
  • On payment of rent of a house, shop, office, land, etc.
  • On payment of service charges of professionals.
  • On payment of service charges of Consultants or Freelancers etc.


Read more 👉 A Complete Analysis of Section 194R of Income Tax.

On what basis is TDS deducted?

How much TDS will be deducted from the salary of an employee?  It depends on the income tax slab applicable in that financial year.  Normally, TDS of 10% is deducted by banks on payment of interest, subject to the condition that the interest is more than 40 thousand rupees in a year.  But if the customer does not give the Permanent Account Number (PAN) to the bank, then the bank deducts TDS of 20% on the interest.  Similarly, TDS is deducted from every source of income.

When is it mandatory to deposit TDS?

Every company or institution deducting TDS at the source of income is required to deposit TDS by the 7th of every month.  It is worth noting here that the TDS deducted by the 7th of the month following the month on which TDS is deducted has to be deposited by the company with the Income Tax Department.  For example, if an employee working in a company is paid for March, then the TDS deducted on his salary for August has to be deposited with the Income Tax Department by the 7th of September.  This 7th date applies to all types of TDS.  It is mandatory to deposit the TDS for the last month of the financial year i.e., March by 30 April.  Also, if any government institution is not using the challan for TDS payment, it is mandatory to deposit the money on the same date as the TDS is deducted.  If the due date of TDS payment falls on a Sunday or any other public holiday, TDS can be paid on the next working day.

The last date for depositing the TDS amount and TDS return differs:

It is important to note one fact that the date of deposit of TDS amount and the date of filing of TDS return is different. The due date for depositing the TDS amount falls every month while the TDS return is filed every three months.  These dates are the same for all government institutions or non-government institutions.  It is mandatory to file a TDS return for the first quarter i.e., April, May, and June by 31st July of the same financial year.  It is mandatory to File TDS returns for the second quarter i.e., July, August, and September by 31 October.  It is mandatory to file TDS returns for the third quarter i.e., October, November, and December by 31 January.  It is mandatory to file a TDS return for the fourth quarter i.e., January, February, and March by 31st May of the next financial year.

TDS forms differ depending on the payment:

TDS is deducted from various sources of earnings.  It is necessary to use the appropriate TDS form while deducting TDS.  Also, it is necessary to mention these forms while filing a TDS return. Form 24Q for deducting TDS on payment of salary, Form 26Q for deducting TDS on payment other than salary, and Form 27Q for deducting TDS on payment for NRIs.

TDS Payment Methods:

There are two modes of TDS payment used.  The first method is online payment, in which the payment is made directly by visiting the website of the Income Tax Department.  Online payment is mandatory for all companies and such taxpayers to whom Act 44AB of Income Tax is applicable. The second mode of TDS payment is challan. In which TDS payment has to be made by visiting the branch of the bank authorized by the Income Tax Department.  Assesses must have TAN for both types of payments.

On late deducting TDS:

It is in the interest of any company or institution to deduct TDS at the same time when the payment is being made.  If TDS is not deducted on time, interest is also to be paid at the rate of one percent per month. This interest gets added till TDS is deducted on the related payments.

Also, read this 👉 Deductions under Income Tax.

On late deposit of TDS:

The person or institution must deduct TDS to deposit TDS by the 7th of the next month.  If TDS is not deposited by this date, interest is to be paid at the rate of 1.5 percent.  This interest is also applicable to the amount which is not deposited and is added till the TDS balance is deposited.

On the late filing of the TDS return:

If any kind of TDS is deducted by any financial institution or company during any financial year, then its details have to be given to the government. This statement sheet is also known as the TDS return.  This TDS return needs to be filed every three months.  For example, the details of TDS deducted in July, August, and September have to be filed by 31 October.  If the TDS return is not filed by the last date, then a penalty of Rs 200 per day has to be paid under section 234E of the Income Tax Act.  This rate of penalty continues till the total amount payable reaches equal to TDS.  If a TDS return is not filed even for one year from the last date, then the penalty of a minimum of ten thousand to a maximum of 1 lakh has to be paid.

TDS certificate is also available:

According to section 203 of the Income Tax Act, every TDS deductor is required to give a certificate to the person whose TDS has been deducted.  Two types of TDS certificates are issued.  The first is Form 16 which is issued on deducting TDS from salary.  The second is Form 16A which is deducted from any income other than salary.

Based on TDS return, the government can easily collect tax from other sources of income.  Timely filing of TDS returns benefits every company or institution.  Because of this, those extra expenses in the form of fines are avoided.  Simply put, timely filing of TDS returns is the hallmark of a well-organized organization or company.


We have discussed the penalties and interest on late payment of TDS & due dates. Learn more about the penalties incurred upon missing the TDS payment day of the month. Get all details regarding TDS e payment/e filing at Academy Tax4wealth. Grasps the File TDS Return Online to file online tax returns employing the authorized software tools.

Click here to know, How to File TDS Return Online?


1. Can I file TDS after the due date?

Failure to file your TDS returns on the day of the month can mean that you simply are subject to a late filing fee of Rs. 200 per day. The fee is charged for each day after the due date till the date on which your return is filed. However, the utmost fees that you have to pay are restricted to the TDS amount.

2. How do I avoid the late filing penalty?

You can avoid a penalty by filing correct returns, paying your tax by the day of the month, and furnishing any info returns timely. If you cannot do it, therefore, you'll be able to apply for an extension of your time to file or a payment arrangement.

3. What happens if you file taxes 3 years late?

The penalty for filing late is 5% of the taxes you owe per month for the first 5 months – up to 25% of your invoice. The agency will charge you interest till you pay off the balance.

4. How are TDS interest and penalty calculated?

TDS interest for late payment:

For example, say the owed TDS amount is Rs 5000 and also the date of the deduction is 13th January. TDS payment date for that deduction is on the 17th of May. Then the interest owed is Rs 5000 x 1.5% p.m. x 5 months = Rs 375 (from January to May).

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5. What is the current TDS rate?

TDS Deduction Rate for FY 2020-21.

Taxable Income

Tax Rate

Up to Rs. 2,50,000


Rs. 2,50,000 to Rs. 5,00,000


Rs. 5,00,000 to Rs. 10,00,000


Above Rs. 10,00,000


BY: Admin Tax4wealth

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