LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

Tds late payment interest u/s 195

Sandeep Sharma (Accounts executive) (552 Points)

19 September 2019

When making royalty payment under 195, if tds is deposited late then interest will be calculated on tds value or tds+education cess value???

Reply
Follow
Share

12 Replies

Kapadia Pravin (17249 Points)
Replied 19 September 2019

On Total TDS (including cess)

1 Like

Sandeep Sharma (Accounts executive) (552 Points)
Replied 19 September 2019

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.

sabyasachi mukherjee (25988 Points)
Replied 19 September 2019

Tds is a seperate head and education cess is used
bu government in extreme exigency.

Sandeep Sharma (Accounts executive) (552 Points)
Replied 19 September 2019

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

sabyasachi mukherjee (25988 Points)
Replied 19 September 2019

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

Sandeep Sharma (Accounts executive) (552 Points)
Replied 19 September 2019

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?

sabyasachi mukherjee (25988 Points)
Replied 19 September 2019

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

Sandeep Sharma (Accounts executive) (552 Points)
Replied 19 September 2019

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??

Kapadia Pravin (17249 Points)
Replied 19 September 2019

@ sandeep
It's Right

1 Like

Sandeep Sharma (Accounts executive) (552 Points)
Replied 19 September 2019

Thank you very much sir

Suresh Thiyagarajan (Student) (3986 Points)
Replied 19 September 2019

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.

1 Like