TDS Late Filing? Your ₹1L Penalty May Drop to ₹10K

A tax tribunal in Lucknow cut a Section 271H TDS penalty from ₹1 lakh to ₹10,000 per quarter because the TDS was actually paid and the original penalty was way too harsh for the offence.

Here's what happened: ITAT Lucknow reduced a Section 271H TDS late-filing penalty from ₹1 lakh to ₹10,000 per quarter, ruling the maximum penalty was disproportionate when TDS had already been deposited.. Section 271H applies when a deductor files TDS returns late — the penalty range under law is ₹10,000 to ₹1 lakh, giving tribunals room to reduce harsh orders.. The ruling reinforces that actual deposit of TDS before the penalty order is a significant mitigating factor that tax authorities and tribunals must weigh..

What you should do: Check any pending TDS notices under Section 271H — if the underlying TDS was deposited on time or shortly after, gather proof and consult a CA about filing an appeal.. File all overdue TDS returns (Form 24Q for salary, 26Q for non-salary) immediately and pay applicable interest — doing this before a penalty order is passed is your strongest legal shield.. If you receive a maximum ₹1 lakh penalty notice, do not accept it without review — approach ITAT with proof of TDS deposit and cite this proportionality argument to seek reduction..

Section 271H(5) explicitly exempts you from penalty if TDS is deposited, return is filed within one year, and all fees and interest are paid — most taxpayers never invoke this clause.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.