What is the penalty for not deducting TDS at all?

Question

tdsguru.in (CA firm) · Accepted Answer

You are treated as an assessee-in-default — liable for the tax, 1% per month interest, a penalty equal to the tax not deducted, and 30% expense disallowance. Failing to deduct TDS makes you an assessee-in-default: liable to pay the tax that should have been deducted, interest at 1% per month under 201(1A), and a penalty equal to the amount of tax not deducted under Section 271C. On top of that, 30% of the expense is disallowed in your own assessment. A relief exists if the payee has already paid tax on the income and furnished the prescribed accountant's certificate (Form 26A) — then you are not treated as in default for the tax, though interest still applies.