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Calculation of interest on late payment of tds

Rahim (Businessperson) (460 Points)

03 September 2014

Hello professional freinds.

I know that 1.5% interest per month or part of the monthis charged for late payment of TDS. Kindly calculate the exact amount of interest on the below mentioned example:

The TDS amount is Rs 25,000 dated 21/07/2014, which needs to be deposited by 7th August 2014 but has not been deposited till today. How much interest amount be charged on this 25000 @ 1.5% if the TDS along with interest will be deposited by 4th Sept 2014?

I will be highly grateful for the help.

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21 Replies

Sarvesh (student) (287 Points)
Replied 03 September 2014

Assuming dat d bill date is 21/07/2014, as in case of late payment of TDs, interest has 2 be calculated from the bill date & upto to d date of payment.
So in ur case i had assumed d bill date is 21/7/2014
Interest will be calculated as follows -
25000*1.5%*3months = Rs 1125/-
You can pay Rs 1125/- till 30/09/2014.

Rahim (Businessperson) (460 Points)
Replied 03 September 2014

@ sarvesh: When interest along with TDS will be paid on 4th Sept, wont interest be calculated on 2 months only?

25000*1.5%*2months=750?

Sambit Baraj (Consulting Manager) (272 Points)
Replied 03 September 2014

No it will be calculated on 3 months, my learned friend.

Poonam Parekh (Manager - Finance) (21 Points)
Replied 03 September 2014

I agree with Sarvesh

Rahim (Businessperson) (460 Points)
Replied 03 September 2014

The period of default starts from date of deducting TDS which is 21/07/2014 till the date of actual deposit which is 04/09/2014.

21/7/2014 to 20/08/2014= 1 month

21/08/2014 to 04/09/2014 = 1 month

So shouldn't interest be calculated only for 2 months? Kindly explain.

Chand (Commercial Manager) (22 Points)
Replied 03 September 2014

I agree with Mr. Rahim

Chand (Commercial Manager) (22 Points)
Replied 03 September 2014

Intrest to be paid only jul and aug and submitted till 7 sep after the date it will be 3 months intrest

Sambit Baraj (Consulting Manager) (272 Points)
Replied 03 September 2014

For the purposes of calculating interest ondelayed payment of tds, a part of the month (even if it is one day of the month) would be counted as one month. In other words, 21.7.14 - 31.7.14 : 1 month 01.8.14 - 31.8.14 : 1 month 01.9.14 - 04.9.14 : 1 month --------- 3 months ---------

Accounting Home Services (Finance Executive ) (733 Points)
Replied 03 September 2014

MONTH ALWAYS CALCULATE AS PER CALENDER...

You have to deposit late deduction interest @ 1.5% per month or part of the month from the date of payment / credit to deductee till date of deduction.

Procedure for calculating Late Deduction:

Amount Paid / Credited(Rs.)	TDS Deducted(Rs.)	Interest Calculation
Amount Paid / Credited(Rs.)	TDS Deducted(Rs.)	Date of Payment(dd-mmm-yyyy)	Due Date of Deduction(dd-mmm-yyyy)	Date of Deduction(dd-mmm-yyyy)	Period of Delay in Months	Interest on Late Deduction U/S 201 (1A)(Rs.)(Col 2 * Col 6 * 1%)
100000.00	10000.00	3-Mar-2012	3-Mar-2012	4-Mar-2012	1	100.00
Total						100.00

Correct Calculation

No. of months in Defaults=1 i.e., 3-Mar-2012 to 4-Mar-2012

10000*1.5%*1(Months) =100.00

Sambit Baraj (Consulting Manager) (272 Points)
Replied 03 September 2014

I agree with myself.

Sarvesh (student) (287 Points)
Replied 03 September 2014

Bro part of the month is ignored while calculating Interest on late payment of TDS. Thats y i mentioned u can pay the said amount till 30/09/2014. Suppose u going to pay the TDS in nxt month , it vl be calculated for 4 months & so on.