Tds query

Originally posted by : deepak
	My Client paid for Labour Charges and booked a TDS u/s 194 C on that date Date, for example on 1.11.2011. So he need to pay TDS u/s 194 C till 7th Dec,2011. But he has not paid the same. So i just want to know for how much months,Interest @ 1.5 pm will be charge to him? Is the answer is "For 1 month or For 2 month"?

Interest to be paid for 2 months (if paid in the month of december 2011) but if payment is being made now, then 3 months

"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."

Even a default of one day means loss of interest for one month.

If i got the Bill on 8.11.2011 then the Due date will be of 7.12.2011 and so if i paid the TDS amount on 6.1.2012 ,then what would be your answer for the month of Interest wise Calculation?

Originally posted by : deepak
	If i got the Bill on 8.11.2011 then the Due date will be of 7.12.2011 and so if i paid the TDS amount on 6.1.2011 (Typing error = should be 06.01.2012) ,then what would be your answer for the month of Interest wise Calculation?

From 08/11/2011 to 08/12/2011 = 1 month

From 09/12/2011 to 06/01/2012 = Part of month (considered as full month)

Total interest to be paid for 2 months.

Deepak,

Normally interest has to be paid @ 1.5% calculated on amount of TDS if not paid on due date.

Suppose tax was deducted in Nov-2011 (ignore the dates) then tax was to be paid before or upto 07.12.2011. In case it is not paid interest on TDS amount should be paid @ 1.5% on mothly basis. If it is paid in Dec-2011 itself it is 1.5% and if it is paid in Jan-2012 then it should be @ 3% (for two months).

As per section 201(1A) of the income tax act, if the deductor had deducted the tds amount and has not paid the same within the stipulated time perion i.e 7th of next month ,then interest @ 1.50% would be charged.for instance, if the amount is paid on 9th of december then interest would be charged for 2 months. If the amount is not deducted and paid within the stipulated time period then a penalty amount upto the amount of tds in arrear can be levied

IF TDS is made in the month of November and is paid in the month of December but after 7th december then interest shall be paid for two months i.e. 3% and if it is paid in January then for 3 months i.e. 4.5%. The wordings of the Act are as under:

 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,

As month or part of the month is to be considered it will not be calculated from 8th november to 8th december and so.....

Interest is calculated on the basis of date of deduction. In your case, date of deduction is 1st Nov-11. Therefore if you deposit the TDS amount today. You will have to pay interest for the period from 1st Nov-11 to 4th Jan-11 which comes to 2 months and 3 days. It will be rounded off to upper end. Therefore finally you will have to pay interest for 3 months.

I think month here refers to calendar month is it??

I think month here refers to calendar month is it??

No.. the reference to month u/s.201 is not as calender months. 

@ deepak according to me u should pay only one month interest only. If u will pay tds amount before 7.1.2012 than one month interest will pay otherwise 2 months.

  SEE THIS LINK TO END THE CONFUSION.

https://taxguru.in/income-tax/rectify-avoid-interest-default-payment-tds-calculate-interest-tds-defaults.html

reference to month under sec. 201 is not as calender month

@ Rajiv

Sec.201(1) reads as under:

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)   ......; and

       (ii)   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, 

Therefore it can be seen from above that the interest is required to be paid from the date on which the tds is deducted to the date on which it was actually deposited. The wordings framed seems to be too specific and it seems that the interest is proposed to be charged for the entire period from deduction to payment.

Therefore in given case the period seems to be 3 months (1.11.2011 to 7.1.2012)