Failure to collects TDS –penalty liable
As per Section 271 CA of the Income Tax Act, inserted with effect from 1.4.2007
271CA. (1) If any person fails to collect the whole or any part of the tax as required by or under the provisions of Chapter XVII-BB, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to collect as aforesaid.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.
a penalty is liable for not deducting tax at source. And the penalty can be equal to the tax not deducted. This would be applicable from the Financial Year 2007-08. So from April 2007, if you are liable to deduct TDS, including the fee paid to your consultant, please be sure to deduct TDS. Otherwise you will end up paying penalty equal to the tax not deducted.