Non-Payment of TCS to be Paid u/s 206C to Government: Finance Bill proposes Revised Punishment
The bill stated that the penal provision will not apply if the tax collected at source is deposited to the credit of the Central Government on or before the due date prescribed for filing the TCS statement under Section 206C(3) for that period.
The Finance Bill, 2026 has proposed a revised punishment for non-payment of Tax Collected at Source ( TCS ) to the government under Section 276BB of Income Tax Act, 1961.As per the existing Section 276BB, “If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable with rigorous...
The Finance Bill, 2026 has proposed a revised punishment for non-payment of Tax Collected at Source ( TCS ) to the government under Section 276BB of Income Tax Act, 1961.
As per the existing Section 276BB, “If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.”
Through the Finance Bill, 2026, the government has revised the penal provision.
Under the proposed Section 276BB, a person who collects tax at source but fails to pay it to the credit of the Central Government will face punishment based on the quantum of default. Where the unpaid TCS amount exceeds ₹50 lakh, the person may be punished with simple imprisonment up to two years, or fine, or both.
Where the default amount exceeds ₹10 lakh but does not exceed ₹50 lakh, the punishment may extend to simple imprisonment up to six months, or fine, or both.
Also, the proposal also contains a built-in safe-harbour clause. The bill stated that the penal provision will not apply if the tax collected at source is deposited to the credit of the Central Government on or before the due date prescribed for filing the TCS statement under Section 206C(3) for that period.
Proposed Section 276BB as per Finance Bill, 2026
“276BB. If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable-
(a) with simple imprisonment for a term up to two years, or with fine, or with both, where the amount of such tax exceeds fifty lakh rupees; or
(b) with simple imprisonment for a term up to six months, or with fine, or with both, where the amount of such tax exceeds ten lakh rupees but does not exceed fifty lakh rupees; or
(c) with fine, in any other case:
Provided that the provisions of this section shall not apply if the payment of the tax collected at source has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement under the proviso to sub-section (3) of section 206C in respect of such payment.”
