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Interest on Late Deduction of TDS

Ankit Jograan (AM (Acc & Fin)) (27 Points)

23 May 2017

Dear Team, i have 1 Question on Late deduction of TDS. if the TDS was deductible in September 16 and deducted in March 17 and paid the same in May 17 then what will be interest rate on the same. Please suggest me. Thanks

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Sunil Sharma (CMA & CS) (584 Points)
Replied 23 May 2017

As per section 201,

Interest shall be levied at 1% 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 was deducted.

Interest shall be levied at 1.5% 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 was actually remitted to the credit of the Government.

In other words, interest will be levied at 1% for every month or part of a month for delay in deduction and at 1.5% for every month or part of a month for delay in remittance after deduction.

Inaddition ; Under Section 234E, you will have to pay a fine of Rs 200 per day (two hundred) until your return is filed. You have to pay this for every day of delay until the fine amount is equal to the amount you are supposed to pay as TDS.

For example, say that your payable TDS amount is Rs 5000 on 13th May and you pay it on 17th November (i.e. 189 days, counting 17th November). Then the calculation comes out to Rs 200 x 189 days = Rs 37800, but since this is greater than Rs 5000, you will have to pay only Rs 5000 as the late filing fee. Added to this, you also have to pay interest which is mentioned above.

And if in case it gets attracted to the AO then as per

Sec 271H: Assessing officer may direct a person who fails to file the statement of TDS within due date to pay penalty minimum of Rs.10,000 which may extended to Rs.1,00,000.Penalty under this section is in addition to the penalty u/s 234E.This section will also cover the cases of incorrect filing of TDS return. So Kindly file it properly and on time,

Regards,

Sunil Sharma