WHY SHOULD YOU TIMELY FILE YOUR TDS RETURNS?
To avoid the penalty: No doubt, late filing of the TDS/TCS return would attract a heavy penalty of INR 200 per day till default continues.
To prevent additional penalty: Besides the minimum penalty of INR 200, the tax deductor would also be liable for the additional penalty for failure to file TDS return within one year from the particular date. This ranges from INR 10,000 to INR 1 lakh.
To facilitate reconciliation of the ITR: The main purpose of the filing of TDS return is reconciling of the income actually earned with income declared in the income tax return.
To avoid cancellation of the expenditure: If the person supposed to file the TDS return fails to do so on time, then the assessing officer may opt for nullifying the impact of expenditure on which the TDS was required to be deducted but not deducted. Hence liable for incremental tax incidence.
Facilitating filling of Form 26AS: Form 26AS is annual consolidated tax statement that specifies the details of the taxes deducted during the year. Anyone can claim TDS credit only if entries is visible in form 26AS. If you deduct the TDS of a person and not file TDS return, such person may rush to you for the same at last moment.