Section 461 of the Income-tax Act, 2025 — Penalty for Failure to Furnish TDS/TCS Statements

In plain language

What Section 461 is about

Section 461 of the Income-tax Act, 2025 is the penalty provision for a deductor or collector who fails to file the periodic TDS/TCS statement (return) on time, or who files it with incorrect information. It is the re-numbered successor to the well-known Section 271H of the Income-tax Act, 1961. The statement being referred to is the one prescribed under Section 397(3)(b) of the 2025 Act — that is, the quarterly TDS statement (in the old language, Forms 24Q, 26Q, 27Q) and the quarterly TCS statement (Form 27EQ).

In plain words: if you deduct TDS from salaries, contractor payments, rent, interest, professional fees etc., or if you collect TCS, you must not only deposit that money with the Government, you must also report it every quarter. Section 461 is the stick that applies when you miss that reporting duty or report it wrongly.

Who it applies to

• Every TDS deductor — companies, firms, LLPs, proprietors under audit, and any person required to deduct tax at source.
• Every TCS collector — sellers of specified goods, businesses collecting tax at source on sale of scrap, motor vehicles, remittances, etc.
• It does not apply to ordinary salaried taxpayers filing their own ITR — that is a different provision. Section 461 targets the person responsible for filing deduction/collection statements.

The penalty amount

• The Assessing Officer may impose a penalty of not less than ₹10,000 and up to ₹1,00,000.
• The penalty is discretionary, not automatic — the officer weighs the facts. This is different from the daily late-filing fee (see below), which is automatic.
• It applies to two defaults: (a) failure to file the statement within the prescribed time, and (b) furnishing incorrect information (wrong PAN, wrong challan details, wrong amounts) in the statement.

The important relief — Section 461(2)

No penalty is levied for late/non-filing if the deductor/collector proves that:

• The tax deducted or collected was paid to the credit of the Central Government, along with any late-filing fee and interest; and
• The statement was actually delivered within the grace window allowed by the section, measured from the due date in Section 397(3)(b).

In effect, if you have paid the Government its money (with fee and interest) and you file the statement within the cure period, the ₹10,000–₹1,00,000 penalty simply does not apply. Note: sources on the exact length of this grace window differ — several describe it as one month under the 2025 Act, while the legacy Section 271H allowed one year. Because this figure directly affects money, confirm the current window from the bare Act/Rules or a professional before relying on it. Importantly, this relief in sub-section (2) covers the late-filing limb only; the "incorrect information" limb is not automatically forgiven.

How it interacts with related sections

• Section 427 (late-filing fee, old 234E): A mandatory fee of ₹200 per day of delay, capped at the total TDS/TCS amount. This runs in addition to Section 461 — the fee is automatic; the 461 penalty is separate and discretionary.
• Section 397(3)(b): The section that actually requires the statement to be filed — the trigger for 461.
• Interest for late deposit and the fee must be cleared to claim the 461(2) relief.

Practical implications

• File your quarterly statements on time — the daily fee under Section 427 accrues relentlessly, and once past the cure window the discretionary penalty of up to ₹1,00,000 opens up.
• Always deposit the tax first — the penalty relief hinges on the Government having received its money plus fee and interest.
• Verify PANs and challan details before filing; the "incorrect information" limb can attract penalty even if you filed on time.