Interest, Fee, Penalty & Prosecution for Failure to Deposit Tax Deducted:
If a person fails to deduct the whole or any part of the
tax at source, or, after deducting, fails to pay the whole or any part
of the tax to the credit of the Central Government within the prescribed
time as under:
4.5.1 He shall be liable to action in accordance
with the provisions of section 201. Section 201(1A) lays down that such
person shall be liable to pay simple interest
(i) at 1% for every month or part of the
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
(ii) 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.
Such interest, if chargeable, is mandatory in nature and
has to be paid before furnishing of quarterly statement of TDS for
respective quarter.
4.5.2 Section 271C lays down that if any person
fails to deduct whole or any part of tax at source or fails to pay the
whole or part of tax deducted, he shall be liable to pay, by way of
penalty, a sum equal to the amount of tax not deducted or paid by him.
4.5.3 Further, section 276B lays down that if a
person fails to pay to the credit of the Central Government within the
prescribed time, as above, the tax deducted at source by him, he shall
be punishable with rigorous imprisonment for a term which shall be
between 3 months and 7 years, along fine.
