LIVE GST Audit Course by CA Sachin Jain. Register Now!!

Interest on late payment of 'interest on tds'

CA Deepak Gupta (In Practice) (81 Points)

07 September 2011

Dear All

I have received a notice from Income Tax Department asking me to pay Additional Interest on TDS over and above which I have paid while making late payment of TDS. Furhtermore they have charged Interest on 'Late Payment of Interest' about which I dont know anything.

Kindly provide me provisions in Income Tax Act regarding payment of interest on Late Payment of TDS as well as provisions regarding Interest on 'Late Payment of Interest'. (A.Y. 2010-11)

Warm Regards.

Reply
Follow
Share

18 Replies

CA Deepak Gupta (In Practice) (81 Points)
Replied 08 September 2011

Please provide details for Interest on Interest for TDS

CA Siddhi (PRACTICE) (257 Points)
Replied 17 October 2011

I have also received many such notice. Please provide the provisions for the same. It states Late Payment Interest Amount and Interest on late payment of interest about which I dont have any idea.

CA Deepak Gupta (In Practice) (81 Points)
Replied 05 November 2011

@ Siddhi....... Our cases are still pending. No one even in department knows under which provision they charged Interest on Interest on 'Late Payment'.

amitmehta_ca (CA, CMA) (99 Points)
Replied 05 November 2011

Dear Deepak,

There is no specific section but its like general practices being followed by income tax department now a days. Its like they treat Interest payable not being paid with TDS as tax payable and issue demand notice for such delay in payment of Interest payable.

Regards

Amit Mehta

CA Deepak Gupta (In Practice) (81 Points)
Replied 05 November 2011

@ Amit Mehta... But what is the vailidity of this practice? Interest is itself a payment for delayed submission of tax... In this way one can argue that they can further levy interest on 'Interest on late payment of Interest'. And this can go upto infinity????????

GIRIDHAR (Sr. Associate - JV Finance) (31 Points)
Replied 27 December 2011

Hi Team,

I am also have same problem of Interest on Interest from demand notice received from IT Dept. can anybody clarify my query and please quote the Notification Number if any. ?

Regards,

Giridhar.D

09840201857

CA Kumar Mukesh (CA CMA FINAL and Advance Excel Trainer) (6871 Points)
Replied 27 December 2011

IThe rate of interest are follows under section 201 read with rule 31A

1% from the date the tax was deductable to the date on which such tax is deducted

1.5% from the date oon which such tax is deducted to the date on which such tax is actually paid

procedure how have to follows

make request to ITO to give extract of data along with the calculation of interest

compare with actual data filled by you i.e.Tds return

in case you have find shortfalls of deposit in you hand please pay right now & after that revised the retunr

CA Siddhi (PRACTICE) (257 Points)
Replied 10 January 2012

i have done that also and it is also available in assessee's TAN Account in that defaults and quarter wise details are available. but no one in the department is able to ans how it is calculated. it is loss to assessee as we need to make payement of the same without knowing the section under which it is charged. I have also talked with ITO TDS but even they are not able to ans the said query.

CA SANTOSH SAH (CHARTERED ACCOUNTANT) (183 Points)
Replied 18 January 2012

`Dear friends,`

`Revised interest rate for late payment of TDS is 1.5% Per month W. E.F. 01.07.2010.also partially month is considered as full month for payment of interest so there is not any provision for calculation of interest for days.`

`suppose a deductor deduct TDS on 01.01.2012 buit he\she deposited to government on 18.02.2012`

`then he\she has to pay interest for fully 2 months @ 1.5% per month.`

`Thanks!`

1 Like

CA Sandeep Tibrewal (Practice) (34 Points)
Replied 19 April 2012

you don't have to pay interest on interest as it is unjustified and bad in law. So just pay the demand of Interest on late payment and don't pay the demand of Int. on Int. and convey the same to I.T.O. (TDS) through a written formal letter.

CA Vijay (Manager Finance) (110 Points)
Replied 25 April 2012

Thanks for suggestion for Sandeep. I have done this last month where interest on interest was not paid but i am not sure whether ITO or system close this demand. Since no one knows under which section they charge interest on interest, Is there any problem in a system for interest calculation ?

C.A. M.Com. Suhas A. Nagpure (CA) (1175 Points)
Replied 25 April 2012

In section 201 of the Income-tax Act, for sub-section (1A), the following sub-section shall be substituted with effect from the 1st day of July, 2010, namely:—

“(1A) 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 one per cent. 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 one and one-half per cent. for every month or part of a month on the amount of such taxfrom 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.”.