A complete breakdown of every penalty, interest and disallowance triggered by late or incorrect TDS return filing — with real numbers and how to avoid them.
Late TDS compliance is one of the most expensive mistakes a business can make. Unlike many other tax penalties, the 234E late fee cannot be waived and can quickly run into lakhs. This guide explains every penal provision in plain English, with realistic numbers.
| Default | Rate | Period |
|---|---|---|
| Tax deductible but not deducted | 1% per month | From date deductible to date actually deducted |
| Tax deducted but not deposited | 1.5% per month | From date of deduction to date of actual deposit |
Even a part of a month counts as a full month. A 31-day delay attracts two months of interest.
A late fee of ₹200 per day applies for every day of delay in filing the quarterly TDS return. The total late fee cannot exceed the total TDS amount in the return. Importantly, the return cannot be filed without paying the 234E fee — the FVU utility will block submission.
| TDS amount | Days of delay | 234E late fee |
|---|---|---|
| ₹10,000 | 10 | ₹2,000 |
| ₹50,000 | 30 | ₹6,000 |
| ₹2,00,000 | 60 | ₹12,000 |
| ₹5,00,000 | 90 | ₹18,000 |
| ₹5,00,000 | 365 | ₹73,000 (capped at TDS) |
234E cannot be waived by the Assessing Officer — even bona fide delays attract the full daily fee.
If a TDS return is not filed within one year of the due date, or if incorrect information (PAN, amount, section) is filed, an additional penalty between ₹10,000 and ₹1,00,000 can be levied. This is over and above 234E.
Section 271H is not levied automatically. It is initiated only after a show-cause notice. Taxpex frequently helps clients defend 271H notices by showing reasonable cause.
If TDS is not deducted at all (or deducted but not deposited by the ITR due date), 30% of the corresponding expense is disallowed in the profit & loss computation. This can dramatically increase tax liability.
| Expense | TDS not deducted | 40(a)(ia) disallowance | Additional tax @ 30% |
|---|---|---|---|
| ₹10,00,000 rent | Yes | ₹3,00,000 added back | ₹90,000 |
| ₹25,00,000 contractor | Yes | ₹7,50,000 added back | ₹2,25,000 |
| ₹50,00,000 professional fees | Yes | ₹15,00,000 added back | ₹4,50,000 |
If the deductee does not furnish PAN, TDS must be deducted at the higher of the applicable rate or 20%. For non-filers of ITR, Section 206AB increases this further. Always validate PAN on TRACES before deducting.
No — 234E is automatic and cannot be waived. The only remedy is timely filing.
Largely yes. Section 271H is not levied if you have paid the TDS, interest and 234E fee and filed the return within one year of the due date.
Senior contributor at Taxpex Consultancy. Reviewed by a practising Chartered Accountant. Published on 12 June 2026 · Updated on 12 June 2026.
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Absolute return ignores time; CAGR normalises the return to a per-year compounded rate — the standard measure for comparing multi-year returns.
via CAGR CalculatorForm 16 is for salary TDS (annual); Form 16A is for non-salary TDS (quarterly).
via TDS Return FilingYes — monthly TDS, quarterly 24Q/26Q returns and Form 16 generation.
via Compliance Services₹50/day late fee (₹20 for nil returns) plus 18% p.a. interest. After 6 months of non-filing, GSTIN can be cancelled.
via GST Return Filing