Section 234E TDS Return Late Fee: ₹200 Per Day, Maximum Equal to TDS Amount

Section 234E of the Income Tax Act 1961 charges a fee of ₹200 per day for a late TDS/TCS return, from the day after the due date to the actual filing date, capped at the total TDS payable for the quarter. A 30-day late Q2 return carrying ₹1,20,000 of TDS costs ₹6,000. The fee is auto-computed by TRACES and must be paid before the TDS return can be filed. A separate penalty under s.271H (₹10,000–₹1,00,000) can apply — but per the s.271H(1) proviso, no s.271H penalty is leviable where (a) the TDS/TCS itself has been deposited with the Central Government, (b) the interest and s.234E fee have been paid, and (c) the return is furnished within one year of the prescribed time. A timely-deposited but 30-day-late return therefore has zero s.271H exposure; the s.234E fee still applies.

What the law actually requires

Section 234E, Income Tax Act 1961 — fee for failure to furnish a TDS/TCS statement. Any person required to deliver a statement of tax deducted or collected at source who fails to do so within the prescribed time must pay ₹200 for every day during which the failure continues. The maximum is the total amount of TDS/TCS for the relevant quarter — the fee cannot exceed the tax the statement relates to.

TDS return due dates

These are the standard due dates for non-government deductors. A private limited company deducting tax on salaries (Form 24Q), on payments to contractors, professionals, rent, etc. (Form 26Q), and on foreign payments (Form 27Q) faces the same 234E clock for each statement.

The fee structure

The cap is the point that surprises companies with large deductors. A company that deducted ₹50,000 in a quarter and files 60 days late would compute ₹12,000 — but the cap of ₹50,000 does not bind here, so the full ₹12,000 is payable. Conversely, a company with only ₹1,000 of TDS in a quarter has a practical ceiling of ₹1,000: the 234E fee cannot exceed the TDS itself.

The separate s.271H penalty

234E is a fee — automatic, computed by the portal, payable to file. Section 271H is a penalty — discretionary, imposed by the Assessing Officer, ranging from ₹10,000 to ₹1,00,000 — for failure to file a TDS/TCS statement, or for furnishing incorrect information in it. The penalty is not automatic; the officer must pass an order. But a habitually late filer can face both the 234E fee at every filing and a 271H penalty when the officer takes note.

Worked example: Nova Technologies Pvt Ltd files its Q2 24Q late

Nova Technologies Pvt Ltd deducts TDS on 60 employees' salaries in Q2 (July–September). Its Form 24Q for the quarter is due 31 October, but the payroll team files it on 30 November.

If Nova had instead filed the same return 700 days late, the raw fee would be ₹1,40,000 — but the cap of ₹1,20,000 binds, so the fee is ₹1,20,000, equal to the entire quarter's TDS. Filing the return after that point adds no further 234E.

Note what does not stop the clock: paying the TDS itself. Nova deducted and deposited the salary TDS on time through Challan ITNS-281; only the return was late. The 234E fee runs on the missing statement, not on the tax deposit. Delayed deposit of the TDS itself is a separate failure with its own interest under s.201(1A).

What a director should actually watch

• File the TDS statement even if the TDS deposit is in dispute. The 234E clock runs on the statement. Deposit the tax and file the return on time to keep both clear.
• Confirm the cap before panicking about a very late return. The fee cannot exceed the quarter's TDS. For a small quarter the cap can be the whole story.
• Pay the fee at filing — it blocks the return. TRACES will not accept the statement until the computed 234E is paid, so budget it before the filing session.
• Watch for s.271H on repeat offenders. A single late filing is usually just the fee; a pattern of late or incorrect statements invites a discretionary penalty of ₹10,000–₹1,00,000.
• Reconcile Form 24Q/26Q to challans and Form 26AS. Late or mismatched statements slow the credit of TDS to your deductees' Form 26AS. A missing statement can trigger a provisional s.143(1) interest demand on the system-shown unpaid balance at their return processing, corrected once the credit is claimed in their ITR. ("ITC" is a GST-specific term for input tax credit and does not apply here — the correct label is "tax credit of TDS.")

What a late statement does to your deductees

A TDS statement is not just a filing obligation — it is the pipeline that delivers tax credit to the people you pay. When Form 24Q or 26Q is late, the deduction does not appear in the deductee's Form 26AS and AIS until the statement is filed. For a salaried employee, employer TDS that has not been credited by their ITR filing date can push them into a 234A/234B position through no fault of their own — the interest is computed on the unpaid balance as it appears on the system, and the employee discovers the gap only when their return is processed.

For the company, the pattern is equally damaging. A habitually late deductor appears in the department's deductor-compliance data, invites the s.271H penalty (₹10,000–₹1,00,000) alongside the 234E fee, and complicates every annual statement (Form 16/16A) that employees and vendors rely on. Filing the statement on time — even if a corrected statement follows later — keeps the credit flowing and the compliance record clean.

FAQ

How much is the TDS return late fee?
₹200 per day of default under s.234E, from the due date to the filing date, capped at the total TDS/TCS for the quarter.

When are TDS returns due?
31 July (Q1), 31 October (Q2), 31 January (Q3) and 31 May (Q4) for non-government deductors.

Can the fee exceed the TDS amount?
No. The maximum 234E fee is the total TDS payable for the quarter.

Is the fee the same as the s.271H penalty?
No. 234E is an automatic fee payable to file the return; 271H is a discretionary penalty of ₹10,000–₹1,00,000 imposed by the Assessing Officer for late or incorrect statements.

Do I pay the fee before filing the return?
Yes. TRACES computes the 234E fee and will not accept the return until it is paid.

What if I deposited the TDS on time but filed the return late?
The 234E fee still applies — it runs on the late statement, not on the deposit. Only the return's lateness is penalised under 234E.

Use the TDS return calendar to track all four quarters and their due dates: /tools/tds-return-calendar. For a payroll and TDS compliance review, visit pvtltd.co.

Sources

• Section 234E, Income Tax Act 1961 (fee for late TDS/TCS statement)
• Section 271H, Income Tax Act 1961 (penalty for failure to furnish TDS/TCS statement)
• Section 201(1A) ITA 1961 (interest for late deposit of TDS)
• Rule 31A, Income Tax Rules 1962 (due dates for TDS statements)
• TRACES filing behaviour (fee auto-computation and payment before filing)

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