Difference between Late Payment & Late Deduction

The difference between late payment and late deduction:

Late payment: After the tax is deducted at source it has to be deposited into the government account by 7th of the next month (except March for which it is 30th April). If it is deposited later than the due date, late payment interest is charged. The rate of interest for late payment is 1.5% per month or part of a month of the delay.

Late deduction: If the tax is deducted later than the date on which it was deductible i.e. either at the time of giving credit or at the time of payment of the dues, whichever is earlier, late deduction interest is charged. The interest for late deduction is at the rate of 1% per month or part of a month of the delay.

Calculation of Late Payment Interest

Calculation of Late Deduction Interest

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Calculation of Late Payment Interest

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If the tax is deducted on 8th June it becomes due on 7th of next month i.e. 7th July (except for March for which it is 30th April), if this tax is deposited on 10th July to the government’s account i.e. not before 7th of July then it attracts interest at the rate of 1.5% per month or part of the month i.e. 2 months in this case, as it attracts interest from 8th June totalling to 3% of the amount.

Difference between Late Payment & Late Deduction

Interest on Late Payment of TDS

Interest on Late Deduction of TDS

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Calculation of Late Deduction Interest

If tax was deductible on 2nd June (i.e. at the time of giving credit or actual payment of the dues whichever is earlier) but was deducted on 3rd  June then the interest charged would be 1% of the amount for the late deduction.

Difference between Late Payment & Late Deduction

Interest on Late Deduction of TDS

Interest on Late Payment of TDS

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Employers required to collect PAN of the lender banks from the employees to claim Interest in House Property in the salary return

The Finance Act, 2015 had introduced a new section 192(2D) of the Income-tax Act, wherein the employer was obliged to collect the necessary evidence or proof in Form 12BB  to allow any claim for any deduction and/or tax saving investments.

One of the requirements in Form 12BB for claiming the interest on house property is to provide the PAN of the lender i.e. the financial institutions, NBFC or others from where the loan is taken, if available. Though the same is not a mandatory requirement in Form 12BB, the same has been made mandatory in the Annexure-II required to be filed in the salary return -From 24Q for the last quarter of the financial year. The same was made effective from 1st June 2016 by the CBDT by way of its Notification No. 30/2016 dated 29 April 2016.

In case the PAN is not available, no deduction of interest shall be allowed and the total tax deduction of the employees shall be higher than previously deducted.

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