The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.
Duties of the person liable to deduct/collect tax at source
- He shall obtain Tax Deduction Account Number or Tax Collection Account Number (as the case may be) and quote the same in all the documents pertaining to TDS/TCS.
- He shall deduct/collect the tax at source at the applicable rate.
- He shall pay the tax deducted/collected by him to the credit of the Government.
- He shall file the periodic TDS/TCS statements, i.e., TDS/TCS return.
- He shall issue the TDS/TCS certificate in respect of tax deducted/collected by him
Rates for deduct of tax at source
Taxes shall be deducted at the rates specified in the relevant provisions of the Act or the First Schedule to the Finance Act. However, in case of payment to non-resident persons, the withholding tax rates specified under the Double Taxation Avoidance Agreements shall also be considered
Due Dates for Depositing TDS Deducting
According to Section 200 of the Income Tax Act of 1961, the tax deductor must deposit the TDS to the government within the allotted time period. According to current income tax regulations, the tax deductor must deposit the tax with the government by the seventh day of the next month. The due date for taxes that were deducted in March is different for the government and other deductors. The deadline for the government to deposit tax deducted is 7 April. The tax must be deposited by 30 April for all other deductors.
| Deductor | Due Date of Depositing Tax Deducted |
| Tax deducted by Government Offices (March 2024) | 7th April 2024 |
| Other deductors (March 2023) | The deductors like employers, banks: 30th April 2023 |
Due Date for Filing TDS Returns FY 2023-2024
| Quarter | Quarter Period | Quarter Ending | Due Date |
| 1st Quarter | April – June | 30th June | 31st July 2023 |
| 2nd Quarter | July – September | 30th September | 31st Oct 2023 |
| 3rd Quarter | October – December | 31st December | 31st Jan 2024 |
| 4th Quarter | January – March | 31st March | 31st May 2024 |
Note: For the first quarter of FY 2023–24, the deadline for submitting TDS/TCS statements in Form 26Q, 27Q, and 27EQ has been extended to September 30th, 2023.
Due Date to File TCS Returns for FY 2023-2024
| Quarter | Quarter Period | Quarter Ending | Due Date |
| 1st Quarter | April – June | 30th June | 15th July 2023 |
| 2nd Quarter | July – September | 30th September | 15th Oct 2023 |
| 3rd Quarter | October – December | 31st December | 15th Jan 2024 |
| 4th Quarter | January – March | 31st March | 15th May 2024 |
Fees & Penalty for late / Non filing of TDS/ TCS Return
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.
As per section 234E, where a person fails to file the TDS/TCS return on or before the due date prescribed in this regard, then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day during which the failure continues. The amount of late fees shall not exceed the amount of TDS.
As per section 271H, where a person fails to file the statement of tax deducted/collect at source i.e. TDS/TCS return on or before the due dates prescribed in this regard, then assessing officer may direct such person to pay penalty under section 271H. Minimum penalty can be levied of Rs. 10,000 which can go upto Rs. 1,00,000. Penalty under section 271H will be in addition to late filing fees prescribed under section 234E.
Apart from delay in filing of TDS/TCS return, section 271H also covers cases of filing incorrect TDS/TCS return. Penalty under section 271H can also be levied if the deductor/collector files an incorrect TDS/TCS return. In other words, minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000 can be levied if the deductor/collector files an incorrect TDS/TCS return.
No penalty will be levied under section 271H for the failure to file the TDS/TCS return, if the person proves that after paying tax deducted/collected by him, along with the late-filing fee and interest (if any), to the credit of the Central Government, he had filed the TDS/TCS return before the expiry of a period of one year from the due date of filing the TDS/TCS return. In other words, no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied:
- The tax deducted/collected at source is paid to the credit of the Government.
- Late filing fees and interest (if any) is 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 in this behalf.
It should be noted that the above relaxation is applicable only in case of penalty levied under section 271H for delay in filing the TDS/TCS return and not in case of filing incorrect TDS/TCS statement.
Apart from above relaxation, in following two cases the taxpayer can get relief from penalty under section 271H:
- Under section 273A(4) the Principal Commissioner of Income-tax or Commissioner of Income-tax has power to waive or reduce the penalty levied under the Income-tax Act. Penalty can be waived or reduced by the Commissioner of Income-tax if the conditions specified in section 273A(4) in this regard are satisfied.
- Apart from shelter of section 273A(4), section 273B also provides immunity from penalty in genuine cases. As per section 273B, penalty under section 271H will not be levied if the taxpayer proves that there was a reasonable cause for failure.