Tds interest on delay remittance of tds deducted

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sagar

88 Points Joined May 2011

I have a question on Interest Calculation on Delay in Remittance of TDS deducted.

Date on Which the Credit is made = 4/3/15

Date on Payment is Made= 4/4/15

Date on Invoice= 12/2/15

As per section 201, if any person who is liable to deduct tax at source does not deduct tax
at source, or after so deducting fails to pay the whole or any part of the tax to the credit of
the Government, then such person shall be liable to pay simple interest at following rates:
 Interest shall be levied @ 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. Interest shall be levied @ 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 to the credit of the Government.
In other words, interest will be levied @ 1% for delay in deduction and @ 1.5% for delay
in payment after deduction.

Now if i Take from the date of credit i get 63 days is interest is calculated as AmountX18%X63/365

or Days are converted into months.. PLZZ HELP ITS URGENT... GIVE SUGGESTION AND ANY OTHER METHOD YOU KNOW. THANKS IN ADVANCE.

Replies (5)

CMA Poornima Madhava

CMA

13117 Points Joined May 2009

No it is not so. Interest is payable @ 1% or 1.5% (as applicable) per month or part thereof. So let us assume the credit/payment is made on 24/4/15 and tax deducted on same day but deposited on 24/6/15. In this case, interest is payable @ 4.5% (1.5% x 3 months [apr, may, june])

One Of A Kind

CA Final & CS Professional Student

187 Points Joined June 2013

you have to calculate it in months not days. Interest at 1% per month or part of the month should be calculated from 4/3/15 till the date of deduction and then interest at 1.5% per month or part of the month should be calculated till the date of deposit of tds with the govt.