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Querist : Anonymous

Querist : Anonymous (Querist)

26 April 2011 how will i calculate interest on tds amt in case of default.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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26 April 2011 1.5% per month from the date of deduction to date of payment, interest need to calculate monthly basis, (not in day basis)

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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26 April 2011 Under the provisions of section 201(1A) of the Act, a person is liable to pay simple interest at 1.5 per cent for every month or part of month in case of failure of payment of tax after deduction.

Now taking below examples.

Ex 1)
Tax deducted : 25/7/10
Tax deposited : 08/08/10

Due date of payment in above case is 07/08/10 if paid after that interest will be 1.5% upto 24/08/10 (i.e. upto 1 month) after that even if 1 day exceed interest will be 3% for two month(taking part in excess of one month).

Ex 2)

Tax deducted : 06/04/10
Tax deposited : 04/08/10

Due date of payment in above case is 07/05/10 if paid after that TDS 1.5% considering month basis or part in excess of 1 month.
06/04/10 to 05/05/10 (1.5%)
06/05/10 to 05/06/10 (1.5%)
06/06/10 to 05/07/10 (1.5%)
06/07/10 to 04/08/10 (1.5%)
So interest will be levied for 4 months.

Even if Tax deducted on say 31/12/10 due date is 07/01/11 after that upto 30/01/11 interest will be 1.5% p.m.
Another example--

Say TDS deducted on 1st january, 2011 Due date is 07/02/11 even though it crosses 1 month but is TDS deposited on 08/02/2011 Interest will be charged @3% i.e. for two months. as 1 month is crossed and the law say for even a part in excess of 1 month.

Hope it is clear if any further query please do ask.

Message likes : 1 times

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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27 April 2011 Interest on late payment of tds from 01.07.2010
• 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)

Separate Rounding of month for both clause ? :From plain reading every one under stand that only rate is increased by 0.5 % per month but one point you should not that now two default period has been bifurcated in two sets and each period has been upper rounded off to a month. Means even a default of one day means loss of interest for one month .

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