India Supreme Court Holds Penalties for Non-Deduction of Withholding Tax May Not Apply for Late Remission

The Supreme Court of India issued a judgment on 10 April 2023 concerning the penalty under Section 271C of the Income Tax Act 1961 for failing to deduct tax at source. Under Section 271C, the penalty is equal to the amount of tax not deducted.

The appellant/assessee in the case is US Technologies International Pvt. Ltd., which was engaged in a software development business that employed about 700 employees. In the period April 2002 to February 2003, US Technologies International deducted ta…