Hi guy’s
This is Ravi Varma, in this article I will tell you what is the penalty for TDS.
Let’s start,
When a person’s salary crosses the threshold limit set by the government, then the government has to pay tax what we call TDS.
And if a person does not deduct his TDS or deposit it to the government, then at that time the government imposes a penalty on him.
| # | TDS not deduct | penalty/interest |
| 1 | If we do not deduct TDS | 1% per month (only TDS amount) |
| 2 | If we do not deposit the TDS | 1.5% per month (only TDS amount) |
| 3 | If we do not return filling the TDS | 200 per day (only TDS amount) |
Note**** If a person files his own TDS late, then the Assessing Officer can impose a fine of 10000 to 100000 on him.
**** This penalty is charged only on the deducted value of TDS
- If we do not deduct TDS:- If a person does not get his TDS deducted, then a penalty of 1% is levied on him.
- If we do not deposit the TDS:- As we know if our TDS has been deducted then it has to be deposited to the government on the 7th and if we do not do so then a penalty of 1.5% is imposed.
- If we do not return filling the TDS:- If we do not file the TDS return of any person then at that time the government levies a fine of Rs 200 per day.
Many businesses focus on the penalty amount only after a notice arrives, but the bigger challenge is preventing these defaults in the first place. A practical section on common reasons behind TDS errors—such as incorrect PAN details, missed due dates, vendor master inaccuracies, or poor accounting workflows—and the internal controls that can help avoid them would make this guide even more valuable for businesses managing compliance at scale.