Companies may pay Nu 90,000 in fines for delayed TDS deposits

2026-03-02 - 08:15

An accountant at a small company was shocked when he went to deposit the Tax Deducted at Source (TDS) for staff salaries and January rent around 16th February, only to discover he had accrued nearly Nu 4,000 in fines for missing the 10th February deadline. He was charged Nu 300 per day for 6 days or Nu 1,800 for the delay in filing the rental TDS, and another Nu 300 per day for 6 days for the delay in the salary TDS. An additional 15 percent per annum penalty was levied on the TDS amount. The penalties stem from changes in the Income Tax Act 2025, which now requires TDS to be deposited within 10 days after the end of each calendar month. Many companies and businesses remain unaware of this deadline. The Department of Revenue and Customs (DRC) first issued a public notification about the new penalties on its Facebook(FB) page on 4th February 2026 just six days before the 10th February deadline. The DRC FB page has around 30,000 followers, and the accountant said he never saw the notice or received any direct communication. A DRC official said that companies had been sensitized through group meetings. However, it appears the message did not reach enough businesses, and many companies risk facing similar fines. Under the new rules, incorporated companies face a Nu 300 per day fine with no upper limit. This means that even a small delay at the start of the year could snowball into massive penalties of Nu 90,000 after 300 days, far exceeding the original TDS amount. For other entities, the fine is Nu 100 per day, potentially reaching Nu 30,000 in 300 days. The accountant questioned why the DRC, which has been heavily focused on GST compliance, did not conduct more robust outreach regarding the new TDS penalties. The DRC official said that companies can request fines to be waived since this is the first time the rules are enforced. The accountant, however, reported that no waiver option was provided and he was instructed to pay the fines directly, with no concession. The official added that the penalty was introduced because, in the past, some companies held on to TDS for extended periods, sometimes up to a year, before depositing it. Previously, the penal interest for non-deposit was 24 percent per annum, much lower than the current Nu 300 per day fines, which experts say could impose severe financial pressure on small businesses.