Section 276B: Prosecution for Unpaid TDS

Section 276B addresses tax that was deducted and then kept. It is a prosecution provision rather than a penalty one, and it carries rigorous imprisonment of three months to seven years along with a fine.

Key highlights

A different failure from the one Section 271C covers.

3 months

Minimum rigorous imprisonment, up to seven years

Section 276B

Deducted

And then not paid to the government

The trigger

Safe harbour

Where the tax reaches the government in time

Before the quarterly statement is due

What Section 276B Covers

One narrow thing: money that was withheld from someone else and not deposited. The deductor took the 1% out of the seller's consideration, so the amount was never theirs, and the Act treats holding on to it as a criminal matter rather than a computational one.

The consequence is imprisonment of three months to seven years, rigorous, with a fine alongside it. There is no version of this that resolves quietly through the return.

The Safe Harbour

The section does not apply where the deducted tax reaches the government before the quarterly statement for that period falls due. Late is not automatically prosecuted; kept is.

That is the whole distinction worth remembering. Section 271C is the penalty for never deducting. Section 276B is the prosecution for deducting and not paying in, and the safe harbour is what separates a slow deposit from an offence.

Frequently Asked Questions

The questions this term raises most often.

Section 271C penalises a deductor who never deducted, at an amount equal to the tax. Section 276B prosecutes a deductor who deducted and then did not pay the money to the government, with rigorous imprisonment of three months to seven years and a fine.

Section 276B does not apply where the deducted tax reaches the government before the quarterly statement for that period falls due. Interest and other consequences can still run.

This page states the law and what CryptoKar computes from your trade history. It is not tax advice. Judgment calls belong with a chartered accountant. Sections and dates here were read against the source on 21 August 2026.

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