Article explains How to rectify and avoid interest default in Payment of TDS and When is interest on delayed TDS payable, When tax is to be deducted, What is the Due date of deposit of TDS, What is the rate of interest, Example of Interest Calculation, What is the due date of payment of interest, How is interest to be calculated, How to Avoid Interest Default and how to Rectify Interest Default.
Income Tax Department displaying defaults in TDS returns filed on its website www.tin-nsdl.com (TAN registration login). The defaults will be raised as & when processed and will be kept updated in this area. It will be in a Zipped Excel sheet (no password) and quarter wise separate files will be available. (for which defaults are identified).
It is observed that most of the Assessee default on payment of TDS which results in payment of interest, penalty and may also lead to criminal prosecution. Read our Article – Consequences for Non Payment or Late Payment of TDS . In this article we are discussing what is the rate of interest which Assessee may have to pay for delayed payment of TDS, when this interest becomes payable, what is the due date of tds payment, when tds needs to be deducted, how to calculate interest on TDS, Example of Interest Calculation, how to avoid and rectify interest default.
As per income-tax , interest is payable under the following two circumstances
TDS on all types of payments on which TDS is applicable is required to be deducted, at the time of credit or payment, whichever is earlier.
The Tax deducted at source in accordance with the provisions of Chapter XVII-B of the Income tax Act, 1961 by deductors other than an office of the Government shall be paid to the credit of the Central Government –
(i) on or before 30th day of April where the income or amount is credited or paid in the month of March; and
(ii) in any other case, on or before seven days from the end of the month in which the deduction is made; or income-tax is due under sub-section (1A) of section 192.
If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201. Sub-section (1A) of section 201 lays down that such person shall be liable to pay simple interest
(i) at one percent for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted and
(ii) at one and one-half percent 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. Such interest, if chargeable, has to be paid before furnishing of quarterly statement of TDS for each quarter.
|Date Of Payment||Date of Deduction||Due Date||Date of Deposit||Delayed Deposit||Delayed Deduction|
Interest must be calculated and paid before furnishing of quarterly statement of TDS for each quarter.
To avoid interest default Assessee needs to do the following:-
Republished with Amendments