Section 468 of the Income-tax Act, 2025 — Penalty for Failure to Comply with Section 397 (TAN / TDS-TCS Account Number Rules)

In plain language

What Section 468 says in plain English

Section 468 of the Income-tax Act, 2025 is a penalty provision. It punishes anyone who breaks the rules laid down in Section 397 about the Tax Deduction and Collection Account Number — better known as the TAN. In short, if you are supposed to deduct TDS or collect TCS, you must obtain a TAN and quote it correctly everywhere the law requires. If you don't, or if you quote a fake TAN, Section 468 lets the Assessing Officer (AO) charge a penalty of ₹10,000.

This section is the direct successor to Section 272BB of the old Income-tax Act, 1961. The wording has been modernised and the cross-reference now points to Section 397 instead of Sections 203A/206CA, but the substance — a ₹10,000 penalty for TAN defaults — is unchanged.

The two things Section 468 punishes

• Failure to comply with Section 397 (₹10,000): Mainly, not applying for a TAN when you were required to under Section 397(1)(a), or not quoting your allotted TAN in the challans, statements, certificates and prescribed documents required under Section 397(1)(b).
• Quoting a false TAN (₹10,000): If a person who must quote their TAN in the documents referred to in Section 397(1)(b) quotes a number that is false, and which he knows or believes to be false or does not believe to be true, the AO can levy a separate ₹10,000 penalty.

Who does this apply to?

Section 468 applies to every deductor and collector — companies, firms, LLPs, proprietors, government offices, banks, trusts and even individuals/HUFs whose accounts are audited and who must therefore deduct TDS. If you are legally required to deduct TDS (for example on salary, rent, contractor payments, professional fees, or interest) or to collect TCS (for example on sale of scrap, timber, or certain goods), you fall within the TAN rules and hence within Section 468.

What Section 397 actually requires (so you avoid the penalty)

• Apply for a TAN [Sec 397(1)(a)]: Use the new Form 134 (Government deductors) or Form 135 (non-Government deductors), which from 1 April 2026 replace the old Form 49B.
• Quote the TAN [Sec 397(1)(b)]: Mention your 10-character alphanumeric TAN on all TDS/TCS challans, quarterly statements, TDS/TCS certificates (Form 16, 16A, 27D), and other prescribed documents and correspondence with the department.
• Deposit tax and file statements [Sec 397(3)]: Pay deducted/collected tax to the Government on time and file the periodic TDS/TCS statements; correction statements must now be filed within two years from the end of the tax year (reduced from six years under the old law).

How Section 468 interacts with other provisions

It is important not to confuse Section 468 with other TDS defaults, each of which has its own consequence:

• Late-filing fee for delayed TDS/TCS statements (₹200 per day, capped at the TDS/TCS amount) is a separate charge — that is a fee, not this ₹10,000 penalty.
• Higher deduction for missing PAN is dealt with under Section 397(2), not Section 468.
• Failure to deduct/collect or pay the tax itself attracts other penalty and interest provisions in the same penalties chapter (Sections 448 onward), plus interest.

Section 468 is narrowly aimed at the TAN account-number discipline: get the number, use the number, and don't fake the number.

Practical implications

• The penalty is discretionary — the law says the AO "may impose", so a genuine, quickly-corrected mistake with reasonable cause (Section 470 / general reasonable-cause protection) may escape penalty, but you should never bank on it.
• The ₹10,000 is per default, and the false-TAN penalty is separate, so careless behaviour can stack up.
• Because a single TAN error can repeat across many quarterly statements and certificates, fixing your TAN master data once prevents dozens of downstream defaults.