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Tds late payment interest u/s 195

Others 392 views 12 replies
When making royalty payment under 195, if tds is deposited late then interest will be calculated on tds value or tds+education cess value???
Replies (12)
On Total TDS (including cess)
Sir, i have created a head in books "education cess payable" and i am booking education cess in this separate head and only booking 10% tds in tds on royalty under section 195. So tell me is it right way of doing accounting.
Tds is a seperate head and education cess is used
bu government in extreme exigency.

Mam, i didn't get your answer...could u plz elaborate?

Sandeep who is mam?i mean to say tds
is a seperate head and edu cess is a seperate head.

Sorry for name confusion sir, Sir i am booking journal entry for tds on royalty under section as below:-

 

Royalty fee A/c Dr 10000

    To tds payable A/c Cr. 1000

    To health & education cess payable A/c Cr. 40

    To Party A/c Cr.     8960 

 

Is this entry right in books?

 

Tds payable dr.
health and efucation cess dr.
to bank....

Sir it means we will first book cess in liability account as i booked in first entry then we will debit it when making payment...is it right??

@ sandeep
It's Right
Thank you very much sir

1. TDS u/s 195 is to be deducted at the rates in force. TDS for royalty is to be deducted @ 10% (at the rates in force). Edu cess on 10% comes to 10.4% effectively. 
2. Before making the payment to Non Resident TDS u/s 195 @ 10.4% is to be deducted. 
3. If failed to deposit the amount of tax, then interest @ 1.5% p.m is to be paid on the entire amount of TDS deducted. 
4. In your case interest is to be calculated on the entire amount of tax (including Edu cess) and arrive at interest u/s 201(1A). 
Please correct me if the above solution has an alternative view. 

Sir your are right...But we need to maintain seperate heads for tds and education cess and book the 10% tds in tds head and 4 % in education cess


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