Interest on Late Payment of TDS

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In case the assessee deposits the TDS Payment after the due date of payment of the tax deducted at source, he shall be liable to pay interest @1.5% for every month or every part of the month during which the amount is not deposited with the government.

Interest @ 1.5% is liable to be paid from the date on which the TDS was deducted and not from the date the TDS was due. 

For example: TDS was deducted on 25th June and the due date for TDS Payment was 7th July. The assessee fails to deposit the TDS by 7th July. In such a case, the Interest would be calculated from 25th June and not from 7th June.

The interest is to be calculated as per illustrations below: 

Case 1:

Tax Deducted on 26th June, TDS deposited on 9th July (due date was 7th July)

The period of 26th June to 30th June will be calculated as one month (being part of a month) & from 1st July to 9th July will also be treated as one month. As such in this case, the interest payable is for two months. Total interest would be 3%. Sounds odd, but it is true –  for a delay of 2 days, one has to pay interest for two months. 

Case 2:

Tax Deducted on 20th March, TDS deposited on 5th May  (due date was 30th April)

The period of 20th March to 31st March will be calculated as one month, 1st April to 30th April will be another month & from 1st May to 5th May will be treated as another one month. As such in this case, the interest payable is for three months. Total interest would be 4.5%. For a 5 day delay, the interest payable is for 3 months. 

Logic behind this calculation is that, if dues are not paid on time, the interest for each month (or part thereof) is to be paid right from the date of deduction till date of deposit of the TDS. Each month is treated based on the Calendar Month instead of counting the number of days.

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What is form 16C?

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Form 16C is the newly introduced TDS certificate to be issued by rent payer (deductor) i.e. individuals & HUF’s who are not under Tax audit (under section 44AB), paying a rent of Rs. 50,000/- or above per month, to the rent receiver (deductee) as per section 194IB.

Form 16C contains the following details of the deductor and deductee i.e. name, address and PAN and other details like certificate number, financial year of deduction, unique acknowledgement number, amount paid, date, amount of tax deducted and deposited and challan details.

Format for Form 16C

What is form 26QC?

Section 194IB – TDS on Rent (for Individuals & HUF)

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What is form 26QC?

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From 1st June, 2017 individuals & HUF’s who are not under Tax audit(under section 44AB) while paying the rent of Rs. 50,000 or more needs to deduct 5% TDS from the rent as per section 194IB. TDS shall be paid to the credit of Central Government and be deposited in the authorized bank within 30 days from the end of month when tax was deducted. This deposit has to be accompanied by the newly introduced challan-cum-statement of deduction of tax in Form No. 26QC. This payment needs to be made in electronic mode. The active payment challan format will be launched soon.

Format of Form No. 26QC

What is form 16C?

Section 194IB – TDS on Rent (for Individuals & HUF)

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TDSMAN updated with FVU ver. 5.5 & FVU ver. 2.151

TDSMAN has been updated for the following newly released File Validation Utilities:

FVU ver. 5.5 – For statement pertaining to FY 2010-11 onwards
FVU ver. 2.151 – For statement up to FY 2009-10

Please click on “Update Software” in “Utilities” menu to update software and FVU ver. 5.5 & FVU ver. 2.151 utilities.

Click here to view the key features of FVU ver. 5.5
Click here to view the key features of FVU ver. 2.151

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