Penalty for Delayed Filing of TDS Returns

Introduction

Tax Deducted at Source (TDS) is an essential component of India’s tax system, designed to collect income tax directly at the point where income is generated. It applies to various income categories such as salaries, interest, rent, and professional payments. By ensuring tax deduction at the source, TDS helps prevent tax evasion and enables a steady flow of revenue to the government throughout the year. However, delaying TDS payments beyond the prescribed due date can result in interest charges and penalties. In this article, we explain the key aspects of TDS, including penalties for late filing of TDS returns, interest on delayed payments, late filing fees, and important due dates.

Meaning of TDS

Tax Deducted at Source (TDS) is a method of tax collection under the Income Tax Act, 1961, where tax is deducted at the point of income generation. The person making the payment (the deductor) withholds tax before paying the recipient for services such as salaries, commissions, rent, interest, contractor payments, and professional fees. The deducted amount must be deposited with the Income Tax Department within the prescribed timeline to avoid interest and penalties for late payment.

Illustration:

Description	Amount (₹)
Audit Fees Bill	50,000
Less: TDS @ 10% (Section 194J)	5,000
Net amount payable to vendor	45,000

TDS Due Date – Time Limit for Remittance

TDS must be deposited within the following timelines:

For tax deducted from April to February: 7th of the following month
For tax deducted in March: 30th April

Timely remittance helps avoid interest on late payment of TDS.

Understanding TDS Return

TDS returns are quarterly statements submitted to the Income Tax Department, detailing the tax deducted and deposited by the deductor. Filing these returns on time is mandatory and serves as proof of compliance. Failure to file or delay in depositing TDS can result in interest, penalties, and other legal consequences.

Forms for TDS Return Filing

Different forms are prescribed depending on the nature of payment:

Form 24Q: TDS on salaries
Form 26Q: TDS on payments other than salaries
Form 27Q: TDS on payments to non-residents

TDS Return Due Dates

Quarter	Months Covered	Due Date
Q1	April – June	31st July
Q2	July – September	31st October
Q3	October – December	31st January
Q4	January – March	31st May

Ensuring timely TDS payment and filing helps avoid interest and late filing fees.

TDS Penalty

Below are the key penalties and consequences for non-compliance, including late payment interest and late filing fees:
1. Penalty for Non-Deduction or Late Deduction of TDS
Under Section 201(1A):
- Interest for late deduction: 1% per month or part of the month, from the date tax was deductible to the date it is actually deducted.
- Interest for late payment: 1.5% per month or part of the month, from the date of deduction to the date of deposit.
Additionally, under Section 40(a)(i)/(ia):
- Domestic payments: 30% of the expense is disallowed if TDS is not deducted or deposited.
- Payments to non-residents: The entire expense is disallowed.
2. Penalty for Late Filing of TDS Return
If TDS returns are filed after the due date:
- Late filing fee (Section 234E): ₹200 per day until the fee equals the TDS amount.
- Penalty (Section 271H): ₹10,000 to ₹1,00,000 for late filing or incorrect filing of TDS returns.
- Prosecution: Failure to deposit TDS may lead to imprisonment from 3 months to 7 years plus a fine.

TDS Return Late Payment Intimation

A TDS late payment intimation is a notice from the Income Tax Department informing the deductor about delays in TDS deduction, deposit, or return filing. It specifies:
- Delay period
- Interest under Section 201(1A)
- Late filing fees under Section 234E
- Required corrective actions
Filing returns on time—preferably with the support of TDS experts—helps avoid such notices and penalties.

About the Author

Ravi

Ravi is an experienced legal writer who translates complex laws into clear, practical guidance. He helps entrepreneurs understand their legal responsibilities, enabling them to build compliant, confident, and sustainable businesses.

February 1, 2026