Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

Section 271H of the Act inter alia relates to penalty for failure to file Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) returns/ statements within the due date. Sub-section (3) of section 271H of the Act states that no penalty shall be levied if the person proves that after paying TDS/ TCS along with fees and interest to the credit of the Central Government, the person has filed the TDS/TCS statement before the expiry of period of one year from the time prescribed for furnishing such statement.

2. While earlier the due date to file a belated return by the assessee was one year from the end of the assessment year, the time limit presently is 31st December of the same assessment year. Deductees/ collectees face great inconvenience if the TDS/TCS statements by deductors/ collectors are not furnished in time leading to mismatch in TDS/TCS during processing of income tax returns and raising of infructuous demands.

3. To ensure better compliance, it is proposed to amend sub-section (3) of section 271H to provide that no penalty shall be levied if the person proves that after paying TDS/ TCS along with fees and interest to the credit of the Central Government, he has filed the TDS/TCS statement before the expiry of period of one month from the time prescribed for furnishing such statement.

4. This amendment will take effect from the 1st day of April, 2025.

[Clause 81]

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Full Text:

Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

Penalty for failure to furnish statements: shortened compliance window limits penalty relief after late TDS/TCS filing. The penalty provision for failure to furnish TDS/TCS statements is amended so that no penalty applies only if, after paying TDS/TCS with fees and interest to the Central Government, the person files the TDS/TCS statement within a shortened compliance period measured from the time prescribed for furnishing such statement.