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Int on tds payment delayed by 1 day

prasad (officer) (28 Points)

21 February 2012

Dear Experts.

If TDS payment is delayed by 1 day i.e (insted of 7th of the month it is paid online on 8th) how much interest I have to pay?

Please Reply.

regards

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16 Replies

Mahendra Mundhra (Director) (21 Points)
Replied 21 February 2012

Mr. Prasad, you have to pay @ 1% per month interest on outstanding liability.

CA Vanamala Phani Kumar (Proprietor of M/s Vanamala and Co) (972 Points)
Replied 21 February 2012

Dear Prasad Sir,

Sec 201(1A) says that Interest Levied @ 1.5% per month or part of month

on Late deposit of TDS to the govt from due date.

So you have to paid Interest @ 1.5% on such amount

Thanks for oppurtunity...!!!!!

CA Vanamala Phani Kumar (Proprietor of M/s Vanamala and Co) (972 Points)
Replied 21 February 2012

and Interest rate is increased from 1% to 1.5% from 01-07-2010 find it...!!!!

Anumanchipalli Sathikonda (Tax Consultant) (1349 Points)
Replied 21 February 2012

Mr.Prasad

Please refer to Rule 119A of Income-tax Rules 1962 and Section 201(1A) of Income-tax Act, 1961.

Best Wishes

Sathikonda

Nitil Kr. Agarwala (Persuing CS) (264 Points)
Replied 23 February 2012

Mr. Prasad

Interest on TDS is to be paid @ 1.5% per month.

But you have to pay the interest for two months i.e total @ 3% on total TDS amount.

Best Wishes.

Nitil Kumar Agrawala.

1 Like

CA Rohit (In Practice) (71 Points)
Replied 23 February 2012

The rate of Interest is 1.5% per month or part thereof on TDS payable ( u/s 201(1A)). Since the delay is of on one day the interest should be paid for One month @ 1.5% on the amount of TDS payable.

Nishant Ranka (Chartered Accountant) (21 Points)
Replied 24 February 2012

Mr. Prasad

Interest on TDS on late payment has to be calculate from the date of deduction hence in your case it will for 2 mths @ 1.5 p.a. on total TDS amount.

Best Regards.

CA. N T Ranka

Kanwal_no1 (CA Practice ) (44 Points)
Replied 02 March 2012

Dear Mr Prasad,

In Yours case the date of payment will come into play. If the date of deduction is 1st to 7th of the previous month then Interest will be for 2 months, as delay is more than 1 month. But if the Date of payment is after the 7th of previous month and date of deposit is 8th of next month, then interest will be for 1 month.

Regards

CA Kanwaljit Singh Dhunna

Tarun M Guntanur (Pursuing CA Final) (299 Points)
Replied 23 March 2012

Yes, TDS remittance delayed by a day may cost the deductor up to 3%. So next time, as a deductor if you are not serious about the due date for TDS remittance, just think about this.

Due date for TDS remittance

Ø Where the amount is credited or paid during the month of March – Due date 30^th April.

Ø Other cases – within 7 days from the end of the month in which the deduction is made.

What if the above deadline is missed?

According to Section 201(1A) which is amended by Finance Act, 2010(effective from 01-07-2010):

“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 the whole or any part of the tax 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,—

(i) at 1% for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and

(ii) at 1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid,

and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200”

So, as per the above section, if the tax was deducted, but was not remitted within the due date, interest will be applicable : from the date of deduction to the date of actual payment of TDS.

Relevant Points

1. Interest @ 1.5% will be applicable from the date of deduction till such amount is actually paid and for every month or part thereof. While calculating the period for interest, the period prescribed for making the payment (i.e period up to the due date) cannot be excluded.

2. This interest liability is absolute and should be deposited through self assessment; and the AO or any other Authority cannot waive off such liability for any reason.

3. While calculating the interest, the defaulted TDS amount shall be rounded off to the nearest multiple of 100, any fraction thereof may be ignored.

How 3% interest for a delay of 1 day?

Now, consider an example. Tax was deducted on certain payment made on 05-07-2010. As mentioned above, the due date for payment of this amount to the credit of Central Govt. is 07-08-2010, but the deductor makes the payment on 08-08-2010. Now, interest will be applicable not after the default, but from the date of deduction, which is 05-07-2010 and while calculating the period for interest, the period prescribed for making the payment to the Govt. cannot be excluded. So, applicable interest will be :

05-07-2010 to 31-07-2010 - 1 month

01-08-2010 to 08-08-2010 - 1 month

interest should not be calculated on calendar basis. If we see Rule 119A of Income Tax Rules, we need to compute interest in two ways. Namely:

1. Where interest needs to be computed for a month or part of the month, and
2. Where interest needs to be computed based on calendar month.

Sec 201(1A) uses the words month or part of the month

Kanwal_no1 (CA Practice ) (44 Points)
Replied 24 March 2012

Dear Tarun,

I feel whatever you said above is right except the last point. Period will calculated as follows "

05-07-2010 to 04-08-2010 - 1 Month

05-08-2010 to 08-08-2010 - part of a month treated as full month.

Regards

Kanwaljit

Anumanchipalli Sathikonda (Tax Consultant) (1349 Points)
Replied 24 March 2012

Dear All

I congratulate Mr.Tarun M.Guntanu for his detailed reply. Such detailed replies are wellcome.

Most of the replies in the forum are given in such way that the so called 'expert' knows everything and what he/she says is correct. They do not provided the analysis, background material, case laws for their conclusion but say that we are supposed to listen them and believe to be the correct answer given by them.

This typy of attitude in the proffesionals will leade to deterioration in the vaue of profession. The so called 'experts' are doing a lot of injustice to the profession.

Mr.Tarun keep it up

Best Wishes

Sathikonda

Anumanchipalli Sathikonda (Tax Consultant) (1349 Points)
Replied 24 March 2012

Dear All

I congratulate Mr.Tarun M.Guntanur for his detailed reply. Such detailed replies are wellcome.

This typy of attitude in the proffesionals will leade to deterioration in the vaue of profession. The so called 'experts' are doing a lot of injustice to the profession.

Mr.Tarun keep it up

Best Wishes

Sathikonda