Interest, Late Fee and Penalties under TDS — Explained

This document covers

1. Interest on TDS /TCS
2. Late fee u/s 234E for Non filing of TDS /TCS returns
3. Penalty u/s 271H for Non filing of TDS /TCS returns

1. Interest on TDS /TCS

Interest will be levied in the following cases

1. TDS/ TCS is required to be deducted or collected but not deducted or collected
   
   1. Rate of Interest: 1% per month or part of month
   2. Period of levy: Interest will be calculated from the date on which TDS/TCS is required to be deducted or collected to date of actual deduction
2. TDS/TCS is deducted or collected but not paid to the credit of Government
   
   1. Rate of Interest: 1.5% per month or part of month
   2. Period of levy: Interest will be calculated from the date on which TDS/TCS was deducted or collected to the date of actual payment

2. Late fee u/s 234E for Non filing of TDS /TCS returns

• Late fee will be charged for non-filing of TDS /TCS returns within due date
• Late fee is additional to interest
• Quantum of Late Fee: Late fee will be charged @ Rs 200 per day
• Period of levy: Late fee will be levied from the due date of filing TDS/TCS returns to actual date of filing of TDS/TCS returns.
• Maximum Late fee: The late fee u/s 427 of IT Act 2025 (u/s 234E of IT Act 1961) cannot exceed the total TDS/TCS amount.
• Late fee u/s 234E is applicable for all TDS/TCS returns i.e., Form 24Q, 26Q,27Q, 27EQ, Form 26QB, 26QC,26QD, 26QE

3. Penalty u/s 271H for Non filing of TDS /TCS returns

• Penalty u/s 271H is in addition to late fee u/s 234E and Interest
• Penalty u/s 461 of IT Act 2025 (u/s 271H of IT Act 1961) will be levied for Non filing of TDS/TCS return after 1 year of prescribed due date of TDS/TCS returns
   NOTE

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w.e.f 01 st April 2025, Penalty u/s 271H will be levied if TDS /TCS return is not furnished within 1 month after prescribed due date of TDS/TCS returns.

• Amount of Penalty: The penalty u/s 271H will be minimum Rs 10,000 to a maximum of Rs 1,00,000