Consequences of Non-Deduction of TDS under Income Tax???????????????

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This query is : Resolved

m b (Querist)

23 July 2026 Dear Respected Members,

I would like to seek clarification on the consequences if an audited firm fails to deduct TDS under Section 194C/Other Section's of the Income-tax Act.

As per my understanding:

If TDS is not deducted where it is required, 30% of the related expenditure is disallowed under the Income-tax Act while computing taxable income.
Apart from this disallowance, are there any other consequences?
For example, if the firm is subjected to an Income-tax assessment or scrutiny in the future, can the Income-tax Department still require the firm to deduct and deposit the TDS on the same expenditure, even though 30% of that expenditure has already been disallowed in the same assessment year?
In other words, does the disallowance of 30% under the Income-tax Act relieve the deductor from the obligation to deduct and deposit TDS, or can both consequences apply simultaneously?
I would appreciate your guidance on this issue.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

24 July 2026 Failing to deduct TDS results in a 30% disallowance of the expenditure under Section 40(a)(ia), but it does not relieve the firm from separate recovery actions. During an assessment, the Income Tax Department can simultaneously disallow the 30% expense and levy interest under Section 201(1A) or demand the tax as an assessee-in-default under Section 201(1).

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