Any delay in filing of tax deducted at source (TDS) return on or before the due date, will welcome a late filing fee of ₹200 for every day till the failure continues. Also, there are possibilities a taxpayer may end up losing all the claiming amount in the TDS due to late filing fees. And, as per Income Tax rules, to file TDS, a taxpayer will first have to pay his or her late fees. Apart from this, on delay in filing TDS, the assessing officer is allowed to levy a penalty of a minimum of ₹10,000 which can go up to ₹1 lakh. Hence, to avoid these losses in the form of late fees and penalties, taxpayers are advised to file their TDS on or before the specified deadline. Currently, the first due date is July 31, 2022, for filing quarterly TDS.
For filing, April – June 2022 quarter TDS — the due date is July 31, while the deadline for July to September quarter is set on October 31, and for December 2022 quarter is January 31, and the timeline for filing TDS for March 31, 2022 period is set on May 31.
For TDS, a taxpayer will need form 16/16A which is a certificate of deduction of tax at source and issued on deduction of tax by the employer on behalf of the employees. The taxpayers can verify details of the amount deducted as TDS, TCS, and advance tax paid along with self-assessment tax under form 26AS.
As per the guidelines, when a person (deductor) who is liable to make payments of specified nature to another person (deductee) — shall deduct tax at the source and remit the same into the account of the Central Government. The deductee from whom taxes have been deducted at source would be entitled to get a credit of the amount so deducted based on Form 26AS or TDS certificate issued by the deductor.
According to the Income Tax department, a person who fails to file the TDS/TCS return or does not file the TDS/TCS return by the due dates prescribed in this regard has to pay late filing fees as provided under section 234E and apart from late filing fees he shall be liable to pay penalty under section 271H.
Under section 234E, when a person fails to file their TDS return on or before the due date, will be liable to pay a penalty of ₹200 for every day till the time the taxpayer does not file TDS. The amount of late fees shall not exceed the amount of TDS. Also, TDS cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. It should be noted that ₹200 per day is not a penalty but it is a late filing fee.
The Income Tax department has given two examples of how late filing fees will be calculated on TDS.
Example 1 – The quarterly statement of TDS return for the first quarter of FY23 (April – June 2022) is filed by Mr. Kapoor on April 4, 2023. Meanwhile, TDS claims during the quarter were about ₹8,40,000. Since the deadline for filing Q1 TDS for FY23 is July 31, and Mr. Kapoor filed the tax deducted at the source statement on April 4, 2023 – this means there is a delay of 247 days. Hence, Mr. Kapoor will be liable to pay late fees of ₹49,400 (247 days X ₹200) under section 234E. This late fee amount is less than the TDS amount, hence a taxpayer will have to pay the total fee of ₹49,400 before filing.
Example 2 – Let’s say Mr. Kapoor filed a TDS return for July – September 2022 quarter on April 4, 2023. His TDS amount in the quarter is ₹8,400. Since the due date for filing Q2 TDS for FY23 is scheduled on October 31, this means there is a delay of 155 days in the filing. Under section 234E, Mr. Kapoor will be liable to pay a late fee amounting to ₹31,000 (155 days X ₹200). However, since his TDS claim amount is just ₹8,400 which is lower compared to the late fee, then he will have to pay a late filing fee of ₹8,400. This means, he might end up taking nothing at home.
Additionally, under section 271H, any delay in filing the TDS statement on or before the prescribed date, then the assessing officer may direct such person to pay a penalty. Also, in case of incorrect TDS return filing, the taxpayer will be accountable to pay the penalty. A minimum penalty of ₹10,000 which can go up to ₹1,00,000 is levied in the section.
Notably, as per the department, the penalty under section 271H will be in addition to late filing fees prescribed under section 234E.
However, no penalty will be levied under section 271H, if the delay in filing the TDS/TCS return is under the following condition:
– The tax deducted/collected at the source is paid to the credit of the Government.
– Late filing fees and interest (if any) are paid to the credit of the Government.
– The TDS/TCD return is filed before the expiry of a period of one year from the due date specified on this behalf.