Income Tax Act 1961 Section 271G

Income Tax Act Section 271G deals with penalties imposed on deductors who fail to file the required Tax Deducted at Source (TDS) statements within the prescribed time. This section is crucial for ensuring timely compliance with TDS provisions, which help the government track tax collections at the source.

Understanding Section 271G is important for businesses, professionals, and tax practitioners as it helps avoid penalties and maintain smooth tax operations. Non-compliance can lead to monetary fines, affecting cash flows and legal standing.

Income Tax Act Section 271G – Exact Provision

This section imposes a daily penalty on deductors who delay filing TDS statements beyond the due date. The penalty can accumulate daily, emphasizing the importance of timely compliance.

• Penalty up to ₹10,000 per day of delay.

• Applies to deductors required to file TDS statements.

• Penalty imposed by Assessing Officer.

• Encourages timely submission of TDS returns.

• Penalty continues until default is rectified.

Explanation of Income Tax Act Section 271G

Section 271G mandates penalties for failure to file TDS statements on time. It applies to all deductors responsible for deducting tax at source.

• States penalty for non-filing or late filing of TDS statements.

• Applies to individuals, companies, firms, and other deductors.

• Penalty calculated per day of default.

• Triggered by failure to submit statements under section 200(3).

• No exemption for partial or incomplete filings.

Purpose and Rationale of Income Tax Act Section 271G

This section ensures deductors comply with TDS reporting requirements, helping the government track tax deductions accurately.

• Promotes timely tax compliance.

• Prevents tax evasion through non-reporting.

• Supports efficient tax administration.

• Encourages responsible behavior among deductors.

When Income Tax Act Section 271G Applies

Section 271G applies when a deductor fails to file TDS statements within prescribed deadlines for a financial year.

• Relevant for each financial year’s TDS statement.

• Applies regardless of deductor’s residential status.

• Includes all types of payments subject to TDS.

• Exceptions may apply if delay is due to reasonable cause.

Tax Treatment and Legal Effect under Income Tax Act Section 271G

Section 271G does not affect the computation of income or tax liability directly but imposes monetary penalties for procedural non-compliance.

The penalty is separate from tax dues and must be paid in addition to any tax or interest liabilities. It acts as a deterrent against delayed or non-filing of TDS statements.

• Penalty is monetary, not a tax deduction.

• Does not reduce taxable income.

• Separate from interest under other sections.

Nature of Obligation or Benefit under Income Tax Act Section 271G

This section creates a compliance obligation for deductors to file TDS statements timely. It imposes a penalty for failure but does not provide any direct benefit.

Compliance is mandatory, and penalties are conditional on default duration.

• Creates mandatory filing obligation.

• Penalty imposed for non-compliance.

• Benefit is indirect: avoiding penalties.

• Applicable to all deductors under the Act.

Stage of Tax Process Where Section Applies

Section 271G applies at the TDS statement filing stage, post tax deduction but before assessment.

• Triggered after tax deduction at source.

• Relevant during TDS return filing.

• Precedes assessment or reassessment.

• Penalty can be levied during scrutiny or audit.

Penalties, Interest, or Consequences under Income Tax Act Section 271G

The section imposes a penalty up to ₹10,000 per day for delayed TDS statement filing. Interest on late tax payments may also apply under other sections.

Continuous default can lead to significant financial burden and scrutiny by tax authorities.

• Penalty up to ₹10,000 per day of delay.

• Interest may apply separately on tax dues.

• Potential for further legal action in case of persistent default.

Example of Income Tax Act Section 271G in Practical Use

Assessee X, a company deducting tax on salary payments, failed to file its TDS statement by the due date. The Assessing Officer imposed a penalty of ₹10,000 per day for the 5-day delay, totaling ₹50,000. Assessee X promptly filed the statement and paid the penalty to avoid further action.

• Timely filing avoids heavy penalties.

• Penalty accumulates daily, increasing financial risk.

Historical Background of Income Tax Act Section 271G

Section 271G was introduced to strengthen compliance with TDS provisions. Over time, amendments have clarified penalty limits and filing timelines.

• Introduced to enforce TDS statement filing.

• Amended to specify penalty limits.

• Judicial interpretations emphasize strict compliance.

Modern Relevance of Income Tax Act Section 271G

In 2026, with digital TDS filings and faceless assessments, Section 271G remains vital to ensure deductors meet compliance deadlines.

• Supports digital TDS return systems.

• Encourages timely digital compliance.

• Integral to faceless assessment procedures.

Related Sections

• Income Tax Act Section 200 – TDS deduction and collection.

• Income Tax Act Section 201 – Consequences of failure to deduct tax.

• Income Tax Act Section 203 – Filing of TDS returns.

• Income Tax Act Section 271C – Penalty for failure to deduct tax.

• Income Tax Act Section 234E – Fee for delay in filing TDS returns.

• Income Tax Act Section 194 – TDS on various payments.

Case References under Income Tax Act Section 271G

No landmark case directly interprets this section as of 2026.

Key Facts Summary for Income Tax Act Section 271G

• Section: 271G

• Title: Penalty for failure to furnish TDS statement

• Category: Penalty, TDS compliance

• Applies To: Deductors under TDS provisions

• Tax Impact: Monetary penalty for non-compliance

• Compliance Requirement: Timely filing of TDS statements

• Related Forms/Returns: TDS returns under section 200(3)

Conclusion on Income Tax Act Section 271G

Section 271G plays a critical role in enforcing timely filing of TDS statements by deductors. It imposes daily penalties to ensure compliance, which helps maintain transparency and efficiency in tax collection.

Deductors must prioritize timely submission of TDS returns to avoid heavy penalties and legal complications. This section safeguards government revenue and promotes disciplined tax practices.

FAQs on Income Tax Act Section 271G

What is the penalty under Section 271G?

The penalty can be up to ₹10,000 per day for each day the deductor fails to file the TDS statement on time.

Who is liable under Section 271G?

Any deductor required to file TDS statements under the Income Tax Act is liable if they fail to submit the statements within the prescribed time.

Does Section 271G affect income tax calculation?

No, Section 271G imposes a penalty for non-compliance and does not affect the computation of taxable income or tax liability.

Can the penalty under Section 271G be waived?

The Assessing Officer may waive or reduce the penalty if the deductor shows reasonable cause for delay in filing the TDS statement.

When does the penalty under Section 271G stop?

The penalty continues to accrue daily until the deductor files the TDS statement and the default is rectified.