Failure to deduct tax at source triggers a penalty; related defaults on in-kind payments and VDA transfers also attract penalties. Penalty under Section 271C applies for failure to deduct tax at source, failure to pay dividend distribution tax, and failures to pay or ensure payment of tax where liabilities arise in kind and cash is insufficient, including winnings in kind, online game winnings in kind, benefits or perquisites in kind, and consideration for transfer of virtual digital assets.