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Interest u/s 201(1a) for late payment.

Raunak Goel (B.Com, CA Final) (55 Points)

21 August 2013

I have deducted tax on 30.04.2013 (paid/credit on same day), but deposited the same on 08.05.2013(due date 07.05.2013). I got a default notice demanding Interest u/s 201(1A) @ 1.5% for 2 months. Is this demand correct ?

If not, what should I do further to get it corrected ? Plz help...

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15 Replies

NAGASAI.K (Article Assistant) (193 Points)
Replied 21 August 2013

Interest on late deposit of TDS is calculated from the date of deduction to the date of deposit @ 1.5% per per month or part of the month

1 Like

Aman (Finance Professional) (604 Points)
Replied 21 August 2013

YA demand is correct because u have deposited the TDS after due date in may for the month of april... now u have to pay interest @ 1.5%p.a for 2 month i.e april & may both will included as full month because part of the month of the is also considered as full month as per provisions....

1 Like

Pearl (CA) (25 Points)
Replied 21 August 2013

I have a query. TDS has been deducted in April but remitted in July without interest on late payment. Client plans to remit that interest later during the year. Whether any interest charges are applicable on the said non remitted Interest for 4 months??

1 Like

PASUPATHY PARAMAGURU (CA FINAL) (286 Points)
Replied 21 August 2013

As per my view, tax deposited on 8th may, but due date is 7th of may, even if the one day delay considered as part month, accordingly interest should also to be calculated @ 1.5% for one month, not for the two months. Dear experts pls correct me if my answer is wrong

2 Like

Vikas Aggarwal (CA ) (207 Points)
Replied 22 August 2013

Demand is correct absolutely

1 Like

Ramanuj (Accountant.) (834 Points)
Replied 22 August 2013

Mr. Goal

Demand is Correct you will have to be paid as soon as possible. one day delay have to be paid 2 months of delay . so you have paid 3% as interest.

Ranu Purohit (Job) (55 Points)
Replied 22 August 2013

Yes...Demand is Correct.Kindly read the provision..'IF the tax is not deducted from the date to deduction of TDS to the date of deposite/payments of TDS intrest payble will be one and half percent per month or part of month.So you have to pay the Intrest for the month of April & May both.

Thanks/Regards,

1 Like

Ranu Purohit (Job) (55 Points)
Replied 22 August 2013

Originally posted by : PASUPATHY PARAMAGURU
	As per my view, tax deposited on 8th may, but due date is 7th of may, even if the one day delay considered as part month, accordingly interest should also to be calculated @ 1.5% for one month, not for the two months. Dear experts pls correct me if my answer is wrong

Dear, kindly read the provision it's clearly said that intrest payble for the month and part of the month from the actual payment.so in the above case April is also the first month and respective may is the (part of) month hence he is liable to pay two months intrest.

Thanks/Regards,

PASUPATHY PARAMAGURU (CA FINAL) (286 Points)
Replied 23 August 2013

Thanks for your correction Dear Ranu Purohit.

As per Section 201 (1a) interest shall be

"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, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200.”

As per demand , interest was calculated correctly.

Pearl (CA) (25 Points)
Replied 27 August 2013

Suppose I deduct Rs. 1000 as TDS April and remit Rs. 1000 ONLY in June. ie., without interest on such delay remittance. If the relevant interest portion is being paid in September, what are the consequences?

Interest for 2 months alone to be paid? or shall be calculated til August? or any interest on interest is applicable?

How to deal with such a situation??

Deepak Jain (Article Trainee) (80 Points)
Replied 27 August 2013

Guyzz I have one more query in reference to above.

If TDS has been deducted in month of MAY for the month of APRIL and deposited in may month..then whats penalty and interest...

sakthi (Student CA IPC / IPCC) (166 Points)
Replied 03 March 2014

i have damand for tds for q3 f.y2013-14 for late payment ( tds amount is124021)

actually payment date is 15jan2014 but i was paid 18 jan2014 they sent interest on deduction 201(1A) amount is3819 how they calculte this interest amount. i check with 3% but this not get i got 3721. plz answer immedatly sir

Rajnbansal (Trainee) (21 Points)
Replied 17 July 2014

I am also having the same problem of demand of interest on late payment. I want to know:

1. which challan to be used to pay interest?

2. how to treat it in the downlaoded correction file from traces?

Siddharthbonnytiwari (Article) (52 Points)
Replied 06 May 2017

Dear Experts,

I have filed TDSReturn after DUE date and I am ready to pay Late filling Fees U/s 234E, but i want to know that, is there a chance of any other Penalty or Interest levid on me for Late filling of Return.