The Income Tax Act imposes heavy Interests and Penalties in case of a person who defaults in payment of any amounts to the Govt. collected on account of Tax Deducted at Source.


The penal provisions state that if any person responsible for deducting tax at source, does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax. The said penal provisions are equally applicable to an employer who has paid the tax on non monetary perquisites provided to the employee.

However it has been justified that no penalty shall be charged under Section 221 from such person, principal officer or company unless the Assessing Officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax.

In furtherance of above if any such person, principal officer or company does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay Simple Interest @ 12% per annum (1% per month) on the:

In addition to above such interest shall be paid before furnishing the Quarterly Statement for each quarter in accordance with the provisions Section 200(3). In case of non payment of tax as aforesaid after its deduction, the amount of the tax together with the amount of Simple Interest thereon shall be a Charge upon all the Assets of the person, or the company, as the case may be.