The Central Board of Direct Taxes (CBDT) has issued a stern warning that failure to file Tax Deducted at Source (TDS) returns within the stipulated time may lead to criminal prosecution, in addition to financial penalties. This move underscores the government’s intent to enforce strict compliance with TDS provisions under the Income Tax Act, 1961. Companies and deductors who default in furnishing TDS returns for multiple quarters or deliberately withhold information may face legal action under Section 276B, which prescribes rigorous consequences for non-payment of deducted taxes.

In addition to potential imprisonment, defaulters are liable to pay interest under Section 201(1A) and penalties under Section 234E, calculated at ₹200 per day of default. Furthermore, the penalty may be extended under Section 271H, which imposes a fine ranging from ₹10,000 to ₹1,00,000 for failure to file returns or furnishing incorrect statements. Such consequences apply even if the tax has been deducted and deposited, but the return remains unfiled, making procedural compliance equally critical.

The CBDT has reiterated that repeated non-compliance will be viewed as willful evasion, and field officers have been directed to initiate prosecution proceedings where applicable. Taxpayers are urged to use the updated TRACES portal for timely submissions and to track acknowledgment receipts. Businesses and tax consultants are advised to maintain internal compliance calendars and proactively monitor TDS timelines, as the department increases oversight and enforcement activities to ensure stricter adherence to tax obligations.