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Interest for non deduction of TDS

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sahil khalifa

48 Points Posted on 12 June 2021

Dear Experts,

Is it possible due to non deduction of TDS the Interest on TDS amount exceed the actual amount of TDS ?

Is there any limit of Interest ?

Replies (5)

Quick Summary

This discussion explores whether the interest charged for failing to deduct Tax Deducted at Source (TDS) can exceed the original TDS amount. Experts clarify that there is no upper limit on this interest, meaning it can indeed become higher than the TDS liability. If the recipient has filed their tax return, the deductor may be liable for interest from the deduction date up to the return filing date, requiring a certificate from the recipient.

CMA Poornima Madhava

CMA

13117 Points Posted on 12 June 2021

Since interest for non deduction is applicable @ 1% pm or part thereof, when interest is due for 100 months (>8 years), it would equal the TDS I think.

sahil khalifa

48 Points Posted on 12 June 2021

Thank you Mam,

If TDS liability is 100 & Interest on TDS liability is 150 ... , Then which amount we have to pay as Interest 150 or what ?

I want to know that Interest on TDS amount can exceed then TDS liability or not ?

CMA Poornima Madhava

CMA

13117 Points Posted on 12 June 2021

I think interest of ₹150 has to be paid in this case because there is no cap on interest unlike late fee.

Further, if the deductee has filed IT return considering such income, then interest shall be paid by the deductor from the date of deduction to the date of filing of such return by the deductee. A certificate from deductee is required in this case.