Consequences for Nonpayment of TDS in India

If an individual fails to subtract the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Indian Central Government within the agreed time-frame, the individual shall be legally responsible for the repercussions in agreement with the provisions of Section 201.

Sub-section (1A) of Section 201 states that such individuals shall be accountable to pay simple interest, as follows:

• At 1 percent for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
• At 1.5 percent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Such interest, if chargeable, has to be paid before furnishing of quarterly TDS statements each quarter.

According to Section 271C, if any person fails to subtract whole or any part of tax at source or fails to pay the whole or part of tax deducted, that individual shall be legally responsible to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him.

Also, Section 276B states that if someone fails to pay to the credit of the Central Government within the prescribed time-frame the tax deducted at source, the individual shall be carrying a punishment of rigorous imprisonment for a term which shall be between 3 months and 7 years, along with a fine.

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