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Interest on tds delayed remittance

vinay (accounting) (165 Points)

14 December 2011

Dear Member,

In one of the cases, TDS on REnt was deducted on 5th Aug 2011 and was due to remit on 7th Sept 2011. Due to reasons, the TDS was remitted on 7th Oct 2011 considering 2 months as penalty. But the IT Dept has sent an notice with 3 months as penalty and the difference of 1 month now needs to be remitted. Can any member Please explain how was this 3 months arrived. Iam unable to get the logic?

Thank you,

Vinay

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18 Replies

ashish gupta ( student) (1922 Points)
Replied 14 December 2011

interest will be paid for 3 months as rightly demanded bu IT dept from 5th Sep to 7th October i.e. 2 months and part of the month. refer section 201 of IT Act

2 Like

CA Shraddha (Mcom, CS Exe.) (Service) (224 Points)
Replied 14 December 2011

I think your subject matter is interest and not penalty. In case of default in depositing TDS to the credit of CG within due date interest is levied @ 1.5% from the date of deposit i.e. 05.08.2011 in your case. Hence, in my opinion interest will be levied for the period 05.08.2011 to 07.10.2011 i.e. date of actual deposit of tax. So interest should be levied for 2 months only and not three months. You should write a correspondence letter in this regard to concerned officer clarifying this fact along with detailed calculation and ask for clarification in this regard.

1 Like

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 14 December 2011

In my view interest for late depsoit of TDS will be for 1 month only. FRom 7 September to 7 oct. Due date of payment till actual date of payment.

1 Like

Hari Krishna.D (CA & CWA Final) (38 Points)
Replied 14 December 2011

shraddha madam is correct...

Bhanu Prakash Rao (Think Beyond Stay Ahead...!) (1064 Points)
Replied 14 December 2011

I agree with shraddha samani i.e, only 2 months...

In case of default in depositing TDS to the credit of CG within due date interest is levied @ 1.5% from the date of deposit i.e. 05.08.2011 in your case. Hence, in my opinion interest will be levied for the period 05.08.2011 to 07.10.2011 i.e. date of actual deposit of tax. So interest should be levied for 2 months only and not three months. You should write a correspondence letter in this regard to concerned officer clarifying this fact along with detailed calculation and ask for clarification in this regard.

1 Like

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 14 December 2011

Friends

I cannot understand why 2 months/3 months situation is cropping up.

Date of deduction- 5/8/2011

Due date of deposit- 7/9/11

Actual date of despoit - 7/10/11.

So, interest under 201(1A) will be for 1 month ie from due date of deposit and not due date of deduction till actual date of deposit.

Please correct if I am wrong.

1 Like

CA Kiran Sutrave (CA) (428 Points)
Replied 14 December 2011

As per Section 201(1A)(ii) of the Act, Interest is payable at one and one-half per cent 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

From August 05, 2011 to September 04, 2011 -- 1 month;
From September 05, 2011 to October 04, 2011 -- 1 month; and
From October 05, 2011 to October 07, 2011 -- 1 month.

The Department is correct.

2 Like

Bhanu Prakash Rao (Think Beyond Stay Ahead...!) (1064 Points)
Replied 14 December 2011

`hi Dipjyoti..`

`In the above case deductor has not paid the TDS within the 7 Days of following month and same 7 days will not be given after that following month I.e, in the above case 7/10/2011 so any month are part of month even a single day carries a interest`

`Date of deduction- 5/8/2011`

`Due date of deposit- 7/9/11 - one month 1.5%`

`Actual date of despoit - 7/10/11. one month (part of month ) 1.5%`

`total 2 months`

`Regards`

1 Like

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 14 December 2011

I agree with CA Kiran Sutrave ji,

Interest is to be calculated as:

Interest is to be calculated from the date on which the tax is actual deducted to the date on which tax is actually paid.

[Sec.201(1A) or 206(7)]

1 Like

Sunil (Internal Auditor) (334 Points)
Replied 14 December 2011

Kiran is correct interest on TDS is payable from the date in which it is deducted/due for diduction if not deducted/paid within the due date.

1 Like

(Guest)

Date of deduction- 5/8/2011

Due date of deposit- 7/9/11

Actual date of despoit - 7/10/11.

Sep 1 month

Oct 1 month

Total 2 months

1 Like

Amit Mishra (C A) (25 Points)
Replied 14 December 2011

I agree with the CA Kiran Sutraveji... Department is correct

1 Like

Purnima (student) (722 Points)
Replied 14 December 2011

interest will be calculated for 3 months i.e from date of deduction to date of payment.

Here date of deduction is 5th Aug and payment on 7th Oct = 2 months + some days ( which is equal to 1 month for interest calculation)

so interest will b calculated for 3 months @ 1.5%p.m

2 Like

Versatile....... (Chartered Accountant) (82 Points)
Replied 14 December 2011

well my opinion is d same as f Ashish Gupta & Kiran Sutrave above...if tds is not deposited in time then interest for delay in payment is levied @ 1.5% from "the date of deduction to d date f actual payment" which comes out to be 2months 2 days...therefore interest will be levied for 3 months(as month cover's part f month as well)...so d dept. has correctly demanded 1 month's interest that was short deposited by u...

i hope this will clear ur doubt...

1 Like