Tax deductors, after deducting TDS from specified payments, are deliberately not depositing the taxes so deducted in Government account and continue to deploy the funds so retained for business purposes or for personal use. Such retention of Government dues beyond the due date is an offence punishable u/s 276B of the Income Tax Axt, 1961.rigirous imprisonment for a term extends up to seven years shall be imposed on such default.
In order to ensure timely deposit of TDS, CBDT has withdrawn the criterion of minimum retention period of 12 months. Thus defaulters, who have retained the TDS deducted and failed to deposit the same in Government account within due date, shall be liable for prosecution, irrespective of the period of retention.
However, the offence u/s 276B of the Income Tax Act can be compounded by Chief Commissioner having jurisdiction on the case, either before or after the launching of prosecution proceedings.