Chapter XXI - Penalties
Section 448
Section 448: penalty for failure to deduct tax at source
Section 448 is the TDS-default penalty provision - if a person who is required to deduct tax at source under Chapter XIX-B fails to deduct it (or fails to pay it, or ensure it is paid), the Assessing Officer can impose a penalty equal to the tax that should have been deducted or paid.
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Need advice on Section 448?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
If any person fails to—
(a) deduct the whole or any part of the tax as required under Chapter XIX-B; or
(b) pay or ensure the payment of, the whole or any part of the tax as required by or under—
(i) Note 2 below the Table in section 393(3); or
(ii) Note 6 to section 393(1) (Table: Sl. No. 8),
then, the Assessing Officer may impose on him, a penalty equal to the tax which such person failed to deduct or pay or ensure payment of, as aforesaid.
Introduction
Section 448 permits a penalty for failure to deduct required tax under Chapter XIX-B, or to pay or ensure payment in the two specifically cited section 393 notes.
The amount of a possible penalty equals the tax not deducted, paid or ensured to be paid. Identifying the precise underlying obligation is necessary before measuring the amount.
Key takeaways
Two statutory routes
The failure may be to deduct under Chapter XIX-B or to pay or ensure payment under the cited section 393 notes.
Equal to the failure amount
The penalty measure is the tax the person failed to deduct, pay or ensure was paid.
Assessing Officer discretion
The text says the Assessing Officer may impose the penalty.
What Section 448 says
"If any person fails to-- (a) deduct the whole or any part of the tax as required under Chapter XIX-B; or (b) pay or ensure the payment of, the whole or any part of the tax as required by or under-- (i) Note 2 below the Table in section 393(3); or (ii) Note 6 to section 393(1) (Table: Sl. No. 8), then, the Assessing Officer may impose on him, a penalty equal to the tax which such person failed to deduct or pay or ensure payment of, as aforesaid."
How the penalty is measured
The penalty is not a fixed amount - it is pegged exactly to the shortfall: whatever amount of tax the person failed to deduct, or failed to pay or ensure payment of, is the amount of the penalty the Assessing Officer can impose.
This covers both an outright failure to deduct tax under Chapter XIX-B, and a failure to pay or ensure payment of tax as required under the specific notes to section 393(1) and 393(3).
Applying Section 448 in practice
Exposure. The potential penalty equals tax not deducted as required under Chapter XIX-B, or tax not paid or ensured to be paid under Note 2 below the section 393(3) Table or Note 6 to section 393(1) Table Sl. No. 8. Identify which duty was breached; deducting but failing to remit may also raise distinct provisions. Hypothetical: A payer omits deduction on a covered payment. Compute the tax that should have been deducted under the correct rate and exceptions before measuring penalty exposure. Checklist: payment nature, deductor status, rate, exemption certificate, deduction and remittance records. Section 470 reasonable cause is relevant.
Step-by-step flow for applying Section 448
- 1
Was the person required to deduct tax under Chapter XIX-B?
- Yes: Go to the next step.
- No: Skip to the section 393 payment check (step 3).
- 2
Did the person fail to deduct the whole or any part of that tax?
Compare the tax required to be deducted with the tax actually deducted. The rate and the amount come from Chapter XIX-B, not from Section 448.
- Yes: The shortfall is a measure of the penalty under Section 448(a).
- No: Go to the next step.
- 3
Was the person required to pay or ensure payment of tax under Note 2 below the Table in section 393(3) or Note 6 to section 393(1) (Table: Sl. No. 8)?
- No: Skip to step 5 if step 2 found a shortfall; otherwise Section 448 does not apply.
- Yes: Go to the next step.
- 4
Did the person fail to pay or ensure payment of the whole or any part of that tax?
Section 448(b) covers this failure.
- 5
Fix the penalty
The Assessing Officer may impose a penalty equal to the tax the person failed to deduct, pay or ensure payment of. It is not a percentage or a daily amount.
Practical checklist
Do
- Identify the exact payment and the underlying TDS or section 393-note obligation.
- Reconcile the amount required with the amount actually deducted or paid.
Avoid
- Do not equate every general TDS payment dispute with the two specific note-based limbs.
Illustrative example
Worked example: a partial failure to deduct tax
Hypothetical facts (illustration only, not a real taxpayer): A company makes payments to a contractor during a tax year on which tax of ₹1,50,000 was required to be deducted under Chapter XIX-B. It deducts only ₹90,000. The amounts are assumed for illustration; the actual rate depends on the relevant provision of Chapter XIX-B.
Obligation
The company was required to deduct tax under Chapter XIX-B, so Section 448(a) is relevant.
Shortfall
Tax not deducted = ₹1,50,000 − ₹90,000 = ₹60,000.
Penalty measure
Section 448 allows a penalty equal to the tax the company failed to deduct: ₹60,000.
Discretion
The Assessing Officer "may" impose it. The ₹90,000 actually deducted does not attract a penalty under Section 448.
Outcome
- Possible penalty under Section 448: ₹60,000, equal to the tax not deducted.
- The penalty is computed on the shortfall only, not on the whole tax that was due.
Frequently asked questions
How much is the penalty for failing to deduct TDS under Section 448?
A penalty equal to the whole (or the part, as applicable) of the tax that the person failed to deduct, or failed to pay or ensure payment of.
Does this penalty apply on top of having to pay the shortfall tax itself?
Section 448 only describes the penalty; the underlying liability to deduct or pay the tax under Chapter XIX-B and the notes to section 393 is separate and continues to apply regardless of the penalty.
Need help applying this provision to your situation?
Get help with TDS deduction and complianceLast updated 2026-10-10