Interest on Late Payment of TDS

      3 Comments on Interest on Late Payment of TDS

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.

Earlier, the Interest liable to be paid was 1% but this has been increased to 1.5% pm with a view to discourage the practice of delaying the deposit of tax after deduction.

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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3 thoughts on “Interest on Late Payment of TDS

  1. MANI RAM YADAV

    This is with reference to communication reference No. CPC/1415/A1/1516210122 dated 08-09.2015.
    2.In this regard, I would like to say that the income tax for the AY 2014-2015 was calculated Rs. 28,385/- by the DDO and same was deducted from my monthly salary regularly i.e. Rs. 1500/- each from the month of June 2013 to November 2013 an Rs. 7000/0 and Rs. 12385/- was deducted from my salary from the month of Jan & Feb 2014. As such, the total tax Rs. 28,385/- was deducted from my salary for AY 2014-2015.

    3.It will also out of place to mention here that I have not filed any income tax return for the AY 2014-16 as my taxable income was below Rs. 5 lacs and it was told that if the taxable income is less that 5 lacs, in that case it is not necessary to file any ITR.
    4.

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  2. MANI RAM YADAV

    This is with reference to communication reference No. CPC/1415/A1/1516210122 dated 08-09.2015.
    2.In this regard, I would like to say that the income tax for the AY 2014-2015 was calculated Rs. 28,385/- by the DDO and same was deducted from my monthly salary regularly i.e. Rs. 1500/- each from the month of June 2013 to November 2013 an Rs. 7000/0 and Rs. 12385/- was deducted from my salary from the month of Jan & Feb 2014. As such, the total tax Rs. 28,385/- was deducted from my salary for AY 2014-2015.
    3.It will also out of place to mention here that I have not filed any income tax return for the AY 2014-16 as my taxable income was below Rs. 5 lacs and it was told that if the taxable income is less that 5 lacs, in that case it is not necessary to file any ITR.
    4.In the light of above, it is requested that the interest payable Rs. 7,556/- as shown in the receipt is not correct, as the undersigned has deposited the Income tax on regular basis during the FY 2014-15 and not liable to pay the interest as shown due against me. Further so far as the ITR is concerned, it is the responsibility of the DDO concerned to do the needful.
    5.In view of above, it is requested that interest of Rs. 7,556/- may be waived off and same may be refunded to me as early as possible.

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