interest on tds

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survesh (Querist)
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23 March 2009 sir
we are a cha firm.I have not deducted tds from april 08 to feb 09 now i will deduct tds for april to feb.the tds amount is rs 74695.00 but i dont now how to cal. the interst.so please say me the formula for cal. interest on tds. 1% interest is charged so from april to feb its 11% so i should cal.74695*11%=8216.00 is it right please say.

please say me the accounting entry to pass the tds for party
party dr
interest dr
tds payable cr
is the entry right.

regards
survesh

HUZAIFA HUSSAIN

HUZAIFA HUSSAIN (Expert)
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23 March 2009 INTEREST ON TDS SHOULD BE CALCULATED FROM THE DAY IT BECOMES DUE & PAYABLE. SO IF U R LIABLE TO PAY THE TDS IN APRIL THAN INT.SHOULD BE FROM MAY TO FEB. IN THE SAME WAY FOR MAY TDS INT SHOULD BE FROM JUNE TO FEB LIKEWISE FROM THE MONTH IT IS PAYABLE TO THE MONTH IT IS PAID.

THE ENTRY U HAVE PASSED IS CORRECT.

Tushar Yerawar

Tushar Yerawar (Expert)
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23 March 2009 Interest for dealy in payment of TDS needs to be paid for the period from the date on which such tax was deductible to the date on which such tax is actually paid.

In your case as the tax was deductible in Apr-08 onwards which will be deducted in Feb-09 and paid in Mar-09, interest TDS for Apr-08 should be calcualted for 12 months as the interest is @1% for every month or part of the month.

The accounting entry mentioned above is correct. Please ensure that you show the amount of interest seperately at the time of payment of TDS.

Also, the amount of interest will not be allowed as deduction at the time of computation of income for the previous year.

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