Tax Deductor

Meaning of TAN

Persons liable to apply for TAN

Relevance of TAN

Penalty

Procedure to obtain TAN

Charges for obtaining a TAN

Due date for deposit of TDS to the credit of Central Government

Due date for deposit of TDS to the credit of Central Government:

Tax deducted at source shall be deposited to the credit of Central Government in accordance with the following provisions:

1) In case deductor is an office of the Government

	Particulars		Due Date
	a) Where tax is paid without production of an income-tax challan		On the same day when tax is deducted
	b) Where tax is paid accompanied by an income-tax challan.		On or before 7 days from the end of the month in which the deduction is made or income-tax is due under Section 192(1A)

2) In case of any other deductor

	Particulars		Due Date
	a) Where the amount is credited or paid in the month of March		On or before 30th day of April
	b) In any other case		On or before 7 days from the end of the month in which the deduction is made or income-tax is due under sub-section (1A) of Section 192

Any sum deducted under section 194-IA shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB.

Similarly, any sum deducted under section 194-IB shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QC.

Further, any sum deducted under section 194M shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QD.

Further, any sum deducted under section 194S (by specified persons) shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QE.

Mode of payment of TDS

Consequences if default is made in payment of TDS

Consequences if default is made in payment of TDS

A deductor would face the following consequences if he fails to deduct TDS or after deducting the same fails to deposit it to the credit of Central Government’s account:

Disallowance of expenditure: As per section 40(a)(i) of the Income-tax Act, any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.
However, if tax is deducted or deposited in the subsequent year, as the case may be, the expenditure shall be allowed as deduction in that year.

Similarly, as per section 40(a)(ia), any sum payable to a resident, which is subject to deduction of tax at source, would attract 30% disallowance if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.

However, where in respect of any such sum, tax is deducted or deposited in subsequent year, as the case may be, the expenditure so disallowed shall be allowed as deduction in that year.
Levy of interest: As per section 201 of the Income-tax Act, if a deductor fails to deduct tax at source or after the deducting the same fails to deposit it to the account of Central Government then he shall be deemed to be an assessee-in-default and liable to pay simple interest as follows:
1. at one per cent for every month or part of a 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
2. at one and one-half per cent 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.
Levy of Penalty: Penalty of an amount equal to tax not deducted could be imposed under section 271C. Penalty shall be charged under section 221 if deductor fails to deduct and pay tax to the credit of Central Government. The penalty shall be levied to the extent the Assessing Officer directs, however, the total amount of penalty shall not exceed the amount of tax in arrears.
Prosecution: If a person fails to pay to the credit of the Central Government the tax deducted at source by him he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine. However, the prosecution shall not apply if payment in respect to TDS has been made to the credit of the Central Government at any time on or before the time prescribed for filing the TDS statement in respect to such payment. (applicable w.e.f 01-10-2024).

Person liable to furnish TDS statement

Form for filing TDS statements

Quarter ending of the financial year

Furnishing of TDS statement electronically

TDS Rate

TDS Rate

A deductor is required to deduct tax at source in accordance with the rates as specified in the relevant provision of the Income-tax Act (‘Act’) read with First Schedule to Finance Act. However, if PAN of the recipient is not intimated to the deductor, in view of Section 206AA, tax shall be deducted at source at higher of the following rates:

a) at the rate specified in the relevant provision of this Act; or

b) at the rate or rates in force; or

c) at the rate of 20%.

Further where any person located in a notified jurisdictional area is entitled to receive any sum or income or amount on which tax is subject to TDS, the tax shall be deducted in accordance with at the highest of the following rates:

a) at the rate or rates in force;

b) at the rate specified in the relevant provisions of this Act;

c) at the rate of 30%

Deduction of Tax at Higher Rate for non-filers of Return**

The Finance Act, 2021 has inserted a new section 206AB for deduction of tax at higher rate if deductee failed to furnish return for specified period. This provision shall apply and the tax shall be deductible at the higher rates prescribed under this provision if the following conditions are satisfied:

a) Deductee has not filed the return of income for the assessment years relevant to the previous years immediately prior to the previous years in which tax is required to be deducted;

b) The due date to file such return of income, as prescribed under Section 139(1), has expired; and

c) The aggregate amount of tax deducted and collected at source is Rs. 50,000 or more in said previous year.

The tax shall be deducted at the higher of the following rates:

a) Twice the rate specified in the relevant provision of the Act;

b) Twice the rate or rates in force; or

c) 5%.

** The provisions of section 206AB are omitted w.e.f. 01-04-2025

Note 1: The provisions of section 206AB doesn’t apply to:

a) A non-resident who does not have a PE in India.

b) A person who is not required to furnish the return of income for the assessment year relevant to the said previous year and is notified by the Central Government.

Note 2: If both the provisions of section 206AA and section 206AB are applicable, that is, deductee has neither furnished his PAN to the deductor nor has he furnished his return of income for the specified periods, the tax shall be deducted at the rates provided in section 206AA or section 206AB, whichever is higher.

Note 3: Tax is required to be deducted at higher rates under section 206AB in respect of every sum or income or amount from which tax is deductible under any provision of Chapter XVII-B except the sum or income or amount on which tax is deductible under any of the following provisions:

(a) Section 192: TDS on Salary;

(b) Section 192A: TDS on withdrawal from EPF;

(c) Section 194B: TDS on winning from lotteries, crossword puzzles, etc.

(d) Section 194BA: Income by way of winnings from any online game

(e) Section 194-IA: TDS on winning from racehorses;

(f) Section 194-IB: TDS from payment of rent by certain Individuals or HUF;

(g) Section 194BB: TDS on winning from racehorses;

(h) Section 194LBC: TDS on income in respect of investment in Securitization Trust;

(i) Section 194M: TDS from payment to contractor, commission agent, broker or professional by certain Individuals or HUF;

(j) Section 194N: TDS on cash withdrawal.

(k) Section 194S: Payment on transfer of Virtual Digital Asset (if payer is a specified person)

(l) Section 194T: Payments to partners of Firms.

Threshold limits

Last Updated :

Particulars	Due Date
30th June	31st July of the financial year
30th September	31st October of the financial year
31st December	31st January of the financial year
31st March	31st May of the financial year immediately following the financial year in which deduction is made