Calculation of interest on late payment of tds

Dear Rahim

The Act says the interest needs to be calculated from the date of deduction till the date of payment @ 1.5%p.m or part of month. 

However, as Praveen pointed out, TRACES site computes interest based on each calender month. It is for this reason that some TDS softwares like Winman TDS shows 2 different interests based on both these methods of computation. 

So in your case, actually interest will be for 2 months, that is from 21.07.2014 to 04.09.2014 (which is arrived at as - 21.07.2014 to 20.08.2014 = 1 month, 21.08.2014 to 04.09.2014 = 1 month(this is a part of a month which will be taken as one full month as the Act says so)).

So 25000*1.5%*2 = 750.

Whereas the in TRACES, this will be calculated as 3 months being July, August and September.

I guess this has not been corrected yet at TRACES and I assume that is why you got this doubt at the first place.

If you deposit as per first computation, you may get a notice to pay the balance amount of 1 more month's interest. But then you will have go for further communications with the Dept.

If you think the extra 1 more month's interest is neglible and you can afford to pay, you can pay as per TRACES compuatation as then you will not any notice for short payment of interest.

Please do correct me if i am wrong, anyone.

Regards

Ajay

I agree with all the experts view.. BUT dont you think that department is taking unneccesary advantage of their superiority. How can they charge such a high amount of interest and that also on month wise. It means a delay in 1 day(i.e., instead of paying on 7th if payment is made on 8th) it costs us 1.5% for 2 month i.e., 3%.