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Interet calculation on late payment of tds ?


Suppose I have deducted TDS of Rs 10000 on 14/4/2010 and I have paid the same on 12/7/2010. Now in this case how interest is to be calculated on late payment of TDS . Also how many months of delay will be there upto 30/6/2010 and after 30/6/2010. Actually the issue is if we count days from 12/7/2010 to 14/4/2010 then total days come to 89 days but if we calculate the days from 30/6/2010 to 14/4/2010 then it comes to 77 days and thus now i am confused that interest will be calculated at 1% for 3 months or at 1% for 2 months and 1.5% for one month.........Please also do give refernce of a circular/provision if any


Total thanks : 1 times

 
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Its 1.5% for 3 month. it was suppose to be paid on 7th may not paid so interest for may , june , july months.

 
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Tax Consultant


It has to be considered from 07-05-2010 to 12-07-2010 i.e., 66 days rate of Int @   18% pa

  • For late deduction of Tax deduction at source-(period date from tax deductible to date of actual deduction )(rate 1 % per month or part thereof) 
  • For late deposit of TDS after deduction (period :date from tax deducted and date of actual deposit)(rate 1.5 % per month or part thereof)

42. In section 201 of the Income-tax Act, for sub-section (1A), the following sub-section shall be substituted with effect from the 1st day of July, 2010

 

 

 
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AA (Aritcle Assistant)


1.5 % for 4 months I.e 10000*1.5%*4 . dont go in days ... its moth of part of moth considered as full month.........Rs. 600 would b interest on late tax deposited.

 

 

 
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MANAGER (FINANCE & ACCOUNTS)

In Your case Interest  laiability on tds  will be arised @ 1% for three month upto 30.06.2010 and @ 1.5% for one month of the july month only.

 

Interest is not calculated on day basis , its calculated on month or part of the month basis.

 

Thanks.

 
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I think Sivaguru SM is right,  on reading the following, interest shall be caclculated on day basis,

 

Section 201. CONSEQUENCES OF FAILURE TO DEDUCT OR PAY.

 

 

(1) If any such person and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax :

 

Provided that no penalty shall be charged under section 221 from such person, principal officer or company unless the Assessing Officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax.

 

(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct 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 at eighteen per cent per annum 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.

 

(2) Where the tax has not been paid as aforesaid after it is deducted, the amount of the tax together with the amount of simple interest thereon referred to in sub-section (1A) shall be a charge upon all the assets of the person, or the company, as the case may be, referred to in sub-section (1).

 

Link:http://www.vakilno1.com/bareacts/incometaxact/s201.htm

 
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Interest will be payable for the 3 moths i.e.

1) For May @ 1% pm

2) For June @ 1% pm

3)For July @ 1.5% pm.

 
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Hi Shivguru

You have mentioned that

"

  • For late deposit of TDS after deduction (period :date from tax deducted and date of actual deposit)(rate 1.5 % per month or part thereof)"

Don't you think that this should be statutory date of deposit of TDS (7th May in this case) to the date of actual deposit of tax.

 
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MANAGER (FINANCE & ACCOUNTS)

Before giving the replay should be cleraed to law

SECTION 201(1A) — Failure to deduct whole or any part of tax deducted at source or failure to deposit tax deducted at source THEN

w.e.f. 1-7-2010

If Tax is not deducted

(a) from the date of tax deductible to the date of deduction interest payable will be one per cent per month or part of month.

(b) from the date of deduction of TDS to the date of deposit/Payment of TDS Interest Payable will be one and half per cent per month or part of month.

 
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Tax Consultant


Mr. Ashish did y

SECTION 201(1A) — Failure to deduct whole or any part of tax deducted at source or failure to deposit tax deducted at source THEN

w.e.f. 1-7-2010

If Tax is not deducted

(a) from the date of tax deductible to the date of deduction interest payable will be one per cent per month or part of month.

(b) from the date of deduction of TDS to the date of deposit/Payment of TDS Interest Payable will be one and half per cent per month or part of month.

ou get answer from Mr.CA Navin Jan

 
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