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Tds interest

Kladizkov (Director) (60 Points)

10 October 2014

Hi,

I filed my 24Q for Q2 2014 on Oct 4, 2014. I got a interest on late deduction. I don't know why I got it. All TDS were paid after 2 or 3 days from deduction. But in the justification report it is mentioned as delayed by 2 months.

For example, "date of payment" is 30-June-2014 and "date of deduction" is 02-July-2014. That is the payment was done after two days from deduction. But still in the justification report it is mention as "Period of delay in month" as 2. How is it delays by 2 months?

Please see attachment of justification report.

Please help!

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1 Replies

Sumeet Lunkar (CA) (48 Points)
Replied 15 October 2014

As per Income Tax Act, the TDS should be deducted on date of credit in the books or payment whichever is earlier.

In your case, assuming payment was made earlier, then TDS should have been deducted on that date i.e., 30 June 2014. But it was deducted on 2nd July.

In case of delay in TDS deduction the provision states that, "any delay for month or part of the month" shall be liable for interest. Even if one day delay in that month is considered as entire month.

Therefore

1 day of June (30th June) - Considered as 1st month
2 days of July (1st and 2nd of July) - Considered as 2nd month

Solution: Deduct on the same day when credit is made or payment is done even though the filing date of monthly return is 7th of next month, so that you don't have to incur interest liability when filing quarterly return