Applicability of interest on TDS
This query is : Resolved
27 June 2025
Sir,
I am purchasing from a supplier applicable for TDS under section 194Q on interstate purchases. I have got an invoice dated 31-05-2025 on 5th June 2025. The said invoice was booked and TDS collection was accounted during the month of June 2025 and paid on or before 7th July without interest on TDS. Whether this treatment was correct or may I liable to interest on the said transactions.
I am purchasing from a supplier applicable for TDS under section 194Q on interstate purchases. I have got an invoice dated 31-05-2025 on 5th June 2025. The said invoice was booked and TDS collection was accounted during the month of June 2025 and paid on or before 7th July without interest on TDS. Whether this treatment was correct or may I liable to interest on the said transactions.
12 August 2025
Key Points on Section 194Q TDS:
Section 194Q requires the buyer to deduct TDS at the time of credit or payment, whichever is earlier.
Since the invoice date is 31-May-2025 (credit date), TDS should ideally be deducted when the liability arises (in May), even if you physically received the invoice later.
You deducted TDS in June 2025 (after invoice date) and paid before 7th July 2025 (due date for June).
Applicability of Interest:
Interest under Section 201(1A) is applicable if TDS is not deducted or paid on time.
The due date for deduction/payment of TDS is by the time of credit/payment, whichever is earlier.
In your case, since the invoice date is 31-May-2025, the TDS should have been deducted and paid by 7th June 2025 (7th of next month of invoice date).
Since you deducted and paid TDS in June and July (after 7th June), interest on delayed deduction/payment is applicable.
Conclusion:
Your current treatment is NOT correct.
You are liable to pay interest on the delayed deduction and payment of TDS under Section 194Q for the period from 7th June 2025 until the actual date of deduction/payment.
Suggested Action:
Calculate interest under Section 201(1A) for the delay period.
Deposit the interest along with TDS payment (if not done already).
Maintain proper documentation to avoid notices.
Section 194Q requires the buyer to deduct TDS at the time of credit or payment, whichever is earlier.
Since the invoice date is 31-May-2025 (credit date), TDS should ideally be deducted when the liability arises (in May), even if you physically received the invoice later.
You deducted TDS in June 2025 (after invoice date) and paid before 7th July 2025 (due date for June).
Applicability of Interest:
Interest under Section 201(1A) is applicable if TDS is not deducted or paid on time.
The due date for deduction/payment of TDS is by the time of credit/payment, whichever is earlier.
In your case, since the invoice date is 31-May-2025, the TDS should have been deducted and paid by 7th June 2025 (7th of next month of invoice date).
Since you deducted and paid TDS in June and July (after 7th June), interest on delayed deduction/payment is applicable.
Conclusion:
Your current treatment is NOT correct.
You are liable to pay interest on the delayed deduction and payment of TDS under Section 194Q for the period from 7th June 2025 until the actual date of deduction/payment.
Suggested Action:
Calculate interest under Section 201(1A) for the delay period.
Deposit the interest along with TDS payment (if not done already).
Maintain proper documentation to avoid notices.
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