The Union Finance Minister Nirmala Sitharaman during the Budget Presentation at 11 AM on 23rd July 2024 proposed to amend S.271H of Income Tax Act relating to penalty for failure to furnish statements.
Clause 81 of the bill seeks to amend Sec.271H of the Act, sub-section (1) of the section provides for penalty in case of failure to deliver or cause to be delivered statements referred to S.200(3) or proviso to S.206C (3) or furnishing of incorrect information in the statement.
The subsection 3 of the section prescribed a one year time limit for delivering the statements. The proposed amendment of sub-section (3) shall reduce the time limit from 1 year to 1 month. This amendment will take effect from 1st April,2025.
Under Section 271H of the Income-tax Act, 1961, penalties are imposed for failing to file Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) returns/statements by the due date. Currently, no penalty is levied if the deductor proves that after paying TDS/TCS, along with fees and interest, they filed the TDS/TCS statement within one year of the prescribed time.
Previously, deductors had up to one year from the end of the assessment year to file a belated return. The current deadline is December 31 of the same assessment year. Late submission of TDS/TCS statements by deductors causes significant inconvenience for deductees, resulting in mismatches during income tax return processing and unnecessary demands.
To enhance compliance, an amendment to sub-section (3) of Section 271H is proposed in the Union Budget. This amendment stipulates that no penalty will be imposed if the deductor files the TDS/TCS statement within one month of the prescribed time after paying the TDS/TCS, fees, and interest.
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