04 May 2013
I have been asked to pay interest on the delayed payment of the TDS. The interest Income Tax Department (ITD) has calculated is as below ·Date of Payment of amount on which TDS is Applicable : 31/03/2009
·Amount of fees paid on which TDS is applicable : Rs.250000/-
·TDS deducted and deposited: Rs.25750/-
·Date of deposit of TDS : 29 july 2009
·Month of default : 4 months
·Amount of interest payable : Rs.1030
Up to this I am all right, but ITD also calculated interest on the delayed payment of interest
·Interest on delayed payment of interest : Rs. 465/- ( calculated from the due date of payment of TDS till the date of notice.)
I seek your valued opinion on this matter.
1) Whether ITD is justified in levying interest on interest as shown above?
2) I went for CIT appeal – How can I justify that the interest on interest is not tenable?
18 June 2013
The interest to be paid is simple interest and not compounded interest. Kindly see clause 2) of Section 201 which is reproduced below
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).
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