TDSMAN Blog

Smart & Easy TDS Software for Preparing TDS Returns

TDSMAN Blog - Smart & Easy TDS Software for Preparing TDS Returns

Steps to follow in case of Late Payment Intimation Received

Follow the steps mentioned below in case of Late Payment Intimation Received:

  • The default amount will have to be deposited through challan number ITNS – 281 by ticking minor head ‘400’
  • Add Challan to statement (C9 correction) using “Online Correction Functionality” available on TRACES as C9 correction has been stopped in Offline Correction
  • For closure of late payment default, fill up the fee amount in “interest” column in challan details through Online Correction by clicking on “Request for Correction” under “Default” tab and select Pay 220/LP/LD/LF/ Interest u/s 220 category
  • Please note that once the challan is added to the statement using the “Online Correction Functionality” further corrections can also be done by downloading latest Conso File.
  • Note: In case of paper return, interest amount should be mentioned in annexure.
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FAQ on Late TDS payment

What is the Late payment interest?

When deductor deposits the TDS after due date of deposit, it is a case of late payment and interest will be charged accordingly.

What is the Interest Rate for Late Payment?

  • Prior to 1st July 2010-1% per month
  • After 1st July 2010-1.5% per month

What is the procedure of calculating interest on Late Payment?

Late Payment interest is calculated @ 1.5% per month or Part of the month from the date of deduction +1 day till date of Deposit.

Late TDS paymentProcedure of calculating Late Payment:

Calculation

No. of months in Defaults = 3 i.e., 4-Mar-12+1 day to 12-May-12

4000*1.5%*3(Months) =180.00

What should I do in case of Late Payment Intimation Received?

Follow the steps mentioned below:

  • The default amount will have to be deposited through challan number ITNS – 281 by ticking minor head ‘400’
  • Add Challan to statement (C9 correction) using “Online Correction Functionality” available on TRACES as C9 correction has been stopped in Offline Correction
  • For closure of late payment default, fill up the fee amount in “interest” column in challan details through Online Correction by clicking on “Request for Correction” under “Default” tab and select Pay 220/LP/LD/LF/ Interest u/s 220 category
  • Please note that once the challan is added to the statement using the “Online Correction Functionality” further corrections can also be done by downloading latest Conso File.
  • Note: In case of paper return, interest amount should be mentioned in annexure.

What are the facts that should be considered for calculating Late payment interest raised by TDSCPC? 

Interest is calculated as per sec. 201 (1A) (ii) of IT act 1961, considering the below mentioned facts:

  • Interest is charged from date on which such tax was deducted to the date on which such tax was actually paid
  • Interest is chargeable for every month or part of the month on the amount of such tax.
  • A month is considered to be a calendar month as per general clauses act

What is the due date for the Quarterly deposit of TDS in special case under rule 30(3)?

Quarterly date of deposited of TDS:-Q1 (Apr to Jun) – 7 July, Q2 (Jul to Sep)- 7 OCT, Q3 (Oct to Dec)- 7 Jan, Q4 (Jan to Mar)- 30th April.

If Extension is given, and then the Due date of Deposited will be considered from?

Late Payment interest will be calculated from the date of deduction but eligibility for extension will be considered from the date of payment/credit.

What is the additional Late Payment Interest?

Additional late payment will arise, while in correction statement, deductor has added new deductee rows and has given credit to deductee against newly paid challan or modified Date of Deduction or have made changes in any unmatched challan against which the TDS payment made.

Source: TRACES

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Payment of interest on refund under section 244A of excess TDS deposited under section 195 of the Income tax Act, 1961

The Income Tax (I-T) department will now add interest amount to a delayed refund made on excess tax deducted at source (TDS) cuts and will also not litigate with the deductor on this issue in the future.

The Central Board of Direct Taxes (CBDT) has issued a circular  in this regard to the assessing officers of the I-T department based on a 2014 Supreme Court order, where the apex court had made it clear that the taxman is “bound” to pay an interest on refund made under the TDS category.

The issued circular has been given below:

Circular No. 11/2016

 

F.No.279/Misc./M-140/2015-ITJ

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

 

New Delhi, 26th April, 2016

 

Subject:- Payment of interest on refund under section 244A of excess TDS deposited under section 195 of the Income tax Act, 1961- reg.

The procedure for refund of tax deducted at source under section 195 of the Income tax Act, 1961, to the person deducting the tax is delineated in CBDT Circular No. 7/2007 dated 23.10 .2007. Circular No. 7/2007 states that no interest under section 244A of the Act, is admissible on refunds to be granted in accordance with the circular or on the refunds already granted in accordance with Circular No. 769 or Circular 790 dated 20.4.2000.

2. The issue of eligibility for interest on refund of excess TDS to a tax deductor has been a subject matter of controversy and litigation. The Hon’ble Supreme Court of India in the case of Tata Chemical Limited’ , Civil Appeal No. 6301 of 2011 vide order dated 26.02.2014, held that, “Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/ tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good , just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest.”

3. In view of the above judgment of the Apex Court it is settled that if resident deductor is entitled for the refund of tax deposited under Section 195 of the Act, then it has to be refunded with interest under section 244A of the Act, from the date of payment of such tax.

4. Accordingly, it is advised that no appeals may henceforth be filed on this ground by the officers of the department and appeals already filed on this issue may not be pressed

5. This may be brought to the notice of all concerned.

SadhanaPanwar

DCIT (OSD)(ITJ)

CBDT, New Delhi

Source: Income Tax

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