Consequences of failure to deduct or to pay tax.

1. (1) If an employer (not being an

officer of Government) does not deduct the tax at the time of payment of salary or wage or after deducting fails to pay the tax as required by or under this Act, he shall without prejudice to any other consequences and liabilities which he may incur, be deemed to be an assessee in default in respect of the tax.

1. (2) Without prejudice to the provisions of sub-section (1) if an employer referred to in sub-section (1) does not deduct the tax at the time of payment of the salary or wage, or after deducting fails to pay the tax as required by or under this Act, he shall be liable to pay simple interest at 2[

1[one and half per cent]

¹ Substituted by Act 11 of 2005 w.e.f. 1.4.2005.

² Substituted by Act 14 of 2023 w.e.f.01.04.2023.

] of the amount of the tax due for each month or part thereof for the period for which the tax remains unpaid.

1. (3) If an enrolled person 1[or a person liable to be enrolled] fails to pay the tax as required by or under this Act, he shall be liable to pay simple interest at the rate and in the manner laid down in sub-section (2). 1[(4) Notwithstanding anything contained in sub-sections (2) and (3),-
   • (i) the balance of interest payable upto 31st March 1987 in respect of tax paid belatedly shall not be collected;
   • (ii) any interest that has become payable in respect of tax due as on 31st March 1987 shall not be collected provided such tax is paid in full on or before 30th June, 1989.]1

¹ Inserted by Act 11 of 2005 w.e.f. 1.4.2005

¹ Inserted by Act 15of 1989 w.e.f. 1.4.1989.