Section 271H Income Tax Act: TDS and TCS Return Penalty
Section 271H of the Income-tax Act, 1961 provides for a penalty when a person responsible for deducting or collecting tax at source fails to furnish a prescribed TDS or TCS statement on time or furnishes incorrect information. The penalty is between Rs. 10,000 and Rs. 1,00,000, subject to statutory safeguards and relief.
What is Section 271H?
Section 271H is a penalty provision concerning statements under Section 200(3) (tax deducted at source) and the proviso to Section 206C(3) (tax collected at source). These provisions require the responsible deductor or collector to furnish prescribed statements containing tax and payment particulars within the applicable time limits.
The Assessing Officer may impose the penalty. The penalty is not automatic merely because a statement is delayed: the applicable statutory exception and other procedural protections must be considered.
Explanation of Section 271H(1) to (4)
Section 271H(1): Defaults covered
Clause (a) concerns failure to deliver the prescribed TDS or TCS statement by its due date. Clause (b) concerns furnishing incorrect information in that statement. The two defaults should be distinguished when considering statutory relief.
Section 271H(2): Amount of penalty
The Assessing Officer may direct a penalty of not less than Rs. 10,000 and not more than Rs. 1,00,000.
Section 271H(3): Exception for delayed statements
No penalty under Section 271H(1)(a) is to be levied if the person proves that the tax deducted or collected, together with applicable fee and interest, was paid to the Central Government and the statement was furnished within the statutory grace period. From 1 April 2025, the grace period is one month from the prescribed due date, replacing the earlier one-year period. This exception does not extend to incorrect statements under clause (b).
Section 271H(4): Effective coverage
The section applies to statements relating to TDS or TCS on or after 1 July 2012.
Penalty and fee at a glance
| Provision | Default | Consequence |
|---|---|---|
| 271H(1)(a) and (2) | Late TDS/TCS statement | Penalty Rs. 10,000 to Rs. 1,00,000, subject to Section 271H(3) |
| 271H(1)(b) and (2) | Incorrect TDS/TCS statement | Penalty Rs. 10,000 to Rs. 1,00,000 |
| 234E | Delay in filing prescribed TDS/TCS statement | Fee Rs. 200 per day, limited to the amount of tax deductible or collectible |
The daily fee under Section 234E is distinct from the discretionary penalty under Section 271H. Interest and other consequences may apply separately where relevant.
Practical example of late filing
Assume a quarterly TDS statement is filed 20 days after its due date and the relevant amount of tax deducted is Rs. 50,000. Subject to applicable rules, the Section 234E fee would ordinarily be 20 x Rs. 200 = Rs. 4,000. If the deducted tax, applicable interest and fee are paid and the statement is furnished within one month of the prescribed due date, the statutory exception in Section 271H(3) may protect against the Section 271H penalty for late filing. It does not excuse inaccurate reporting.
Relief, notices and compliance
Check whether Section 271H(3) applies, reconcile challans and deductee or collectee details, correct inaccuracies promptly and retain acknowledgements and payment records. Before responding to a penalty notice, verify the period of default, statutory due date, filing date and the provision invoked. Relief or waiver under other applicable provisions must be assessed on its own legal conditions; payment of the late-filing fee alone does not necessarily eliminate all penalties.
Historical context: Section 271H was inserted by the Finance Act, 2012 with effect from 1 July 2012. The Finance (No. 2) Act, 2024 shortened the relief period under subsection (3) from one year to one month with effect from 1 April 2025. For obligations arising during the transition to the Income-tax Act, 2025, consult the official legislation and transition guidance rather than assuming that section numbers remain unchanged.
Frequently asked questions
What is the maximum penalty under Section 271H?
Rs. 1,00,000; the statutory minimum is Rs. 10,000 where a penalty is imposed.
Does Section 271H apply to incorrect TDS returns?
Yes. Section 271H(1)(b) covers incorrect information in the prescribed statement.
Is the one-month relief available for an incorrect statement?
No. Section 271H(3) concerns the late-filing default under Section 271H(1)(a), not the incorrect-information default.
Are Section 234E and Section 271H the same?
No. Section 234E prescribes a late-filing fee, while Section 271H provides a penalty for specified defaults.