Tds under section 195

This query is : Resolved

Nitesh (Querist)
Follow

15 June 2015 We are grossing up and making payment to foreign vendors.
We had reived the notice for short payment of TDS for FY 2010-11.
Now we had paid the short amount and want to revise the return.
need to confirm which date to be mention in cloum "date of deduction" old date or new date.

Vishal D Shah

Vishal D Shah (Expert)
Follow

15 June 2015 Date of deduction would be old date only. Only the payment is done now. (Even though in your accounts it is entered now was prior period item)

Nitesh

Nitesh (Querist)
Follow

15 June 2015 thanks for your reply.
then we have to pay interest at 1.5% rate.

how can interest 1.5% will applicable..??

In FY 2010-11 we had not deducted not paid.

Nitesh

Nitesh (Querist)
Follow

15 June 2015 We had received demand for short deduction and interest at 1%. we had paid the same and revised the return accordingly.

i had also mentioned old date in revise return.
Then new demand raised by it department for additional interest at rate 0.5%.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
Follow

02 August 2025 Here's a clear explanation about the interest on late deduction/payment of TDS under Section 201(1A) and why you might see two components of interest (1% and 0.5%):

---

### Background:

* You received a **demand for short deduction of TDS** for FY 2010-11.
* You paid the **short deducted TDS along with interest at 1%**.
* After revising the TDS return (with the original date of deduction), you received a **new demand for additional interest at 0.5%**.

---

### How interest under TDS works:

**Section 201(1A)** of the Income Tax Act provides interest on:

1. **Interest at 1% per month or part of the month (12% p.a.)** on the **amount of TDS not deducted** from the date when tax was deductible to the date of actual deduction.

2. **Interest at 0.5% per month or part of the month (6% p.a.)** on the **amount of TDS deducted but not paid to the government** from the date of deduction to the date of actual payment.

---

### In your case:

* Initially, you **did not deduct the tax at all**, so interest @ **1% per month** was charged for the delay in deduction of tax from the date tax was deductible to the date of deduction/payment.

* You paid this amount along with the principal TDS and interest.

* Now, the department raised an additional demand for **interest @ 0.5% per month** on the amount of TDS that was deducted late but paid after delay.

* This is because after you deducted TDS (though late), the delay in **payment to government** attracts interest at the lower rate of 0.5% per month.

---

### Why you must mention the **old date of deduction** in revised TDS return:

* The date of deduction is fixed as the date on which tax was actually deducted (even if you pay later).
* Interest is calculated accordingly, based on actual dates of deduction and payment.
* Revising the return does not change the original date of deduction; it only corrects the reported amount.

---

### What you can do:

* If you believe the additional interest demand is incorrect, you may file a **revision or appeal** against the demand.
* Check carefully the computation of interest with dates of deduction and payment.
* Keep all payment challans and TDS certificates handy.

---

If you want, I can help you draft a letter for appeal or prepare a schedule for interest calculation. Would you like?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now