Section 234E: Penalty for Late Filing of TDS Returns

Timely compliance with tax regulations is crucial for individuals and businesses alike. One such regulation under the Income Tax Act, 1961, is Section 234E, which imposes penalties for delayed filing of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) returns. Non-compliance can result in hefty fines, disrupting financial planning. However, proactive financial planning, such as investing in a Bajaj Finance Fixed Deposit, can help mitigate the impact of penalties by ensuring your funds grow securely. 

Section 234E of the Income Tax Act, 1961, mandates a fee for late filing of TDS or TCS returns. This provision ensures timely compliance by deductors and collectors of tax. A fee of Rs. 200 per day is levied for each day of delay until the return is filed. However, the total penalty cannot exceed the total amount of TDS or TCS payable.

For instance, if you deducted Rs. 5,000 as TDS but delayed filing the return by 50 days, the penalty would amount to Rs. 200 x 50 = Rs. 10,000. However, the penalty is capped at Rs. 5,000, equal to the TDS amount.

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The responsibility for filing TDS/TCS statements lies with the deductor or collector of tax. This includes:

• Employers deducting TDS on salaries.
• Banks deducting TDS on interest payments.
• Businesses deducting TDS on rent, commission, or professional fees.

These entities must ensure timely filing of returns to avoid penalties under Section 234E.

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Filing TDS/TCS statements on time is mandatory. Below are the due dates for filing TDS returns for the financial year 2025-26:

Ensure you mark these dates to avoid penalties.

Key points to note: 

• These due dates apply to the filing of TDS/TCS statements (e.g., Form 24Q for salaries, Form 26Q for non-salary payments, Form 27Q for non-resident payments, and Form 27EQ for TCS) as per the Income Tax Rules.
• The due date for Q4 (31st May) is later than the other quarters (31st of the following month) to allow additional time for year-end reconciliation and processing.
• Section 234E Penalty: As you mentioned in your previous query, failure to file TDS/TCS returns by these due dates triggers a fee of Rs. 200 per day of delay, subject to a cap equal to the TDS/TCS amount for the period.
• Additional Penalties: Beyond Section 234E, failure to file within a reasonable period may attract penalties under Section 271H, which can range from Rs. 10,000 to Rs. 1,00,000 for delays exceeding one year from the due date.

Calculation of fee under Section 234E

Section 234E imposes a fee of Rs. 200 per day for every day of delay in filing TDS/TCS statements. The penalty is calculated from the due date until the actual filing date. However, the total fee cannot exceed the amount of TDS/TCS payable.

In addition to Section 234E, Section 271H imposes further penalties ranging from Rs. 10,000 to Rs. 1,00,000 if the filing delay exceeds one year or if incorrect details are provided.

Illustration:

• TDS of Rs. 15,000 deducted on 1st July 2025.
• Due date for filing: 31st July 2025.
• Actual filing date: 10th November 2025 (102 days late).
• Fee under Section 234E: Rs. 200 x 102 = Rs. 20,400 (capped at Rs. 15,000, the TDS amount).

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If you have missed the due date, you can still file your TDS return by following these steps:

1. Calculate the late filing fee: Determine the penalty under Section 234E based on the number of delayed days.
2. Pay the late fee: Use the government’s online tax payment portal to pay the fee.
3. Prepare the TDS return: Use Form 24Q, 26Q, or 27Q, depending on the nature of the payment.
4. File the return: Submit the return via the TRACES portal.

Filing late can be costly, so ensure timely compliance.

Paying late filing fees is straightforward:

1. Visit the Income Tax Department’s e-filing portal.
2. Navigate to the “e-Pay Tax” section.
3. Select the relevant challan (ITNS 281).
4. Enter the penalty amount under “Fee under Section 234E.”
5. Complete the payment process and save the receipt for future reference.

Compliance with Section 234E is essential to avoid penalties and maintain financial discipline. Filing TDS/TCS returns on time not only saves you from unnecessary fees but also helps streamline your tax obligations. However, penalties and late fees can strain your finances. A smart way to offset this burden is by investing in a Bajaj Finance Fixed Deposit, which offers guaranteed returns, flexible tenures, and high safety ratings from CRISIL and ICRA.

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