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If the deductor fails to deduct tax at source or fails to pay tax after deduction or made default while filing returns then he would be liable to pay some amount of interest and penalties. Here, Taxmantra is providing the total details regarding the interest and penalties which deductor needs to pay under different reasons are as follows – Non- Compliances of TDS – 1.     Interest and Penal Provisions
|
Failure |
Interest |
Penalty |
| a)Â Â Â Â Â For failure to deduct tax at source | Interest chargeable @1% p.m. or part of the month from the date on which it was deductible to the date of on which tax is deducted [Sec 201] Â | Maximum penalty of 100% on amount of TDS [Sec 221]Â |
| b)Â Â Â Â For failure to pay the tax after deduction | Interest chargeable @1.5% p.m. or part of the month from the date on which it was deducted till the date of payment [Sec 201] Â | Maximum penalty of 100% on amount of TDS [Sec 221]Â |
| Default in filing of returns | Not Applicable | Rs 100/day of default(not exceeding the amount of TDS) [Sec 272A(2)] Â |
 2.     Section 48 disallows the expenditure on payment on which tax had not been deducted at source.