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Interest calculation on Late payment of TDS

M N Jain (Consultancy in International Taxation) (31 Points)

05 April 2011

Dear friends

Kindly resolve my below doubt.

Suppose a payment u/s 194C is made on 25/02/2011 and TDS is also deducted on 25/02/2011 as per TDS Rules. But this TDS is deposited to the Govt. treasory on 10/03/2011. Now my query is whether interest u/s 201(1A) @ 1.5% shall be levied for one month or two months ??

Regards

M N Jain (posted on 05/04/2011)

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12 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 05 April 2011

THE INTEREST ON TDS WILL BE CHARGED FOR 1 MONTH @ 1.50% PER MONTH.

1 Like

Avinash c (CA - Final) (83 Points)
Replied 05 April 2011

Tds deducted for the current month has to be deposited on or before 7th of the following month of the month so deducted, For late deposit of TDS after deduction: Intererst @ 1.5% for every
month or part of the month.

Joydip Chaubey (CA-Final Student Former Article Assistant now Self Employed) (41 Points)
Replied 06 April 2011

INTEREST @ 1.5% PER MONTH OR PART OF THE MONTH WILL BE CHARGEABLE AFTER BECOMING DEFAULT IN DEPOSIT OF TDS WITHIN 7TH OF THE SUCCEEDING MONTH FOR APRIL TO FEB AND 30TH APRIL FOR MARCH MONTH..IN THIS CASE THE DUE DATE WAS 7TH MARCH,11 WITHIN WHICH IT WAS NOT DEPOSITED.AND DATE OF DEPOSIT IS 10TH MARCH,11.ONLY 3DAYS ELAPSED.SO IT COMES UNDER THE PURVIEW OF PART OF THE MONTH i.e. LESS THAN ONE MONTH AND INTEREST WILL BE CHARGED @ 1.5% ONLY FOR THE MONTH OF MARCH,11.NO QUESTION OF 2 MONTHS.

saurabh sharma (Manager Accounts) (21 Points)
Replied 06 April 2011

As per Sec 201 (1A) Interest will be charged @ 1% till 30th june2010 & 1.5% from 1st July 2010 per month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid. Hence this seems to be Interest levied for Two Months as per your case.

And this is also a practical calculation which TDS officials are taking at the time of finalisation of the TDS Assessments.

Mahesh Kumar (Advocate) (26 Points)
Replied 06 April 2011

as per sec 201(1A) intt will be charged @ 1%till 30th june 2010 and 1.5% from july 2010 onward per month or part of the month

Bhupati Hrishi Sharma (Finance & Tax Consultant) (22 Points)
Replied 08 April 2011

What if I deducted the TDS on unpaid salary on 31st of march-11, and paiying in the 2nd week of April-11, what is last date of payment for 192A/192B if the salary is credited on 31.3.2011?

RAVI GOYAL (Chartered Accountant) (48 Points)
Replied 05 January 2012

Friends

For this Query M.N.Jain, I would like to quote wording of Section 201(1A) .....principal officer does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,—

(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and

(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid,

Now Mr. Jain's query falls in Sub Section (ii) of Section 201(1A). In this Query

Date of Deduction is 25.02.2011

Due Date of Deposit is 07.03.2011

& Date of Deposit is 10.03.2011

Two Part Months are there (February and March) so literally 1.5% for Every Part Month makes it to 3% for Two part months.

In my View Effective Rate of Interest for delay in deposit is 3%

(Kindly Correct me if i am wrong in my interpretation)

jaya pandey (accountant) (97 Points)
Replied 05 January 2012

THE INTEREST ON TDS WILL BE CHARGED FOR 1 MONTH @ 1% PER MONTH.

Vineet Goyal (Assistant Manager - Finance & Accounts) (702 Points)
Replied 05 January 2012

It will be for one month. Interest is charged from date of deduction to date of deposit which in your case is less than a month. It will be rounded up to one month.

Vineet Goyal (Assistant Manager - Finance & Accounts) (702 Points)
Replied 05 January 2012

Interest rate will be 1.5%

RAVI GOYAL (Chartered Accountant) (48 Points)
Replied 10 February 2012

Hello Friends...

Now My Funda is clear about Interest rate for late deposit of TDS which 1.5% for a month or a part of month. I above example view of Vineet Goyal ji is right. if Your time between date of deduction to date of deposit is less than a month then it will be rounded up to one month. e.g in this case

Date of Deduction is 25.02.11

Due date is 07.03.2011

date of deposit is 10.03.11

Period Between 25.02.11 to 10.03.11 is less than one Month so rate is 1.5% for one month.

if date of deposit changed to 26.03.2011 then period between 25.02.11 to 26.03.11 is more than one month so Interest @ 1.5% for two months.

Any suggestiong/correction will be appreciated. Thnks

Sanjiv Kumar (Sr. Accountant) (45 Points)
Replied 10 February 2012

Income Tax Department raised a demand u/s 156 of IT Act 1961 & send a intimation U/s 200A IT Act 1961 for Interest on Late payment of TDS. My question is about that When we are making the payment of Interest through online or offline (Through Challan) What should be the nature of payment Or What is the code & under 200 or 400.