TDS and TCS default consequences impose assessee-in-default status, interest, asset charge, limitation periods, and conditional penalty.

Section 398 treats a person who fails to deduct, collect, remit or otherwise pay required tax as an assessee in default. Default status is avoided where the recipient has filed a return, included the income, paid due tax, and the deductor or collector furnishes the prescribed accountant's certificate. Interest applies for failure to deduct, collect or remit tax. Unpaid tax and interest create a charge on the defaulter's assets. Orders are subject to prescribed limitation periods, while penalty requires satisfaction that the failure lacked good and sufficient reasons.

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