At the time of the Budget presentation at 11 AM on 23rd July 2024, Union Finance Minister Nirmala Sitharaman asked to revise the S.271H of the Income Tax Act pertinent to the penalty for failure to provide the statements.
Clause 81 of the bill asked to revise Sec.271H of the Act, sub-section (1) of the section furnishes for penalty in the matter of failure to deliver or cause to be delivered statements referred to S.200(3) or proviso to S.206C (3) or furnishing of inaccurate information in the statement.
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Subsection 3 of the section defined a one-year time limit for delivering the statements. The suggested revision of sub-section (3) would reduce the time limit from 1 year to 1 month. This modification will come into force from 1st April 2025.
Penalties are levied under section 271H of the Income-tax Act, 1961, for failing to file the Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) returns/statements by the due date. At present no penalty is to be imposed when the deductor proves that post paying the TDS/TCS including the fees and interest they would file the TDS/TCS statement within the 1 year of the said time.
Earlier, the deductors would have 1 year from the end of the assessment year to file the belated return. December 31 of the same assessment year is the existing due date. Substantial inconvenience for deductees has been caused by the late submission of TDS/TCS statements via deductors, resulting in mismatches at the time of the ITR processing and unnecessary demands.
To improve compliance an amendment to sub-section (3) of Section 271H is suggested in the Union Budget. This amendment prescribes that no penalty will be charged if the deductor files the TDS/TCS statement within 1 month of the specified time after paying the TDS/TCS, fees, and interest.
