Interest on tds
This query is : Resolved
15 August 2013
WHETHER INTEREST ON TDS ALLOWABLE EXPENDITURE UNDER INCOME TAX ACT OR NOT
15 August 2013
It is disallowed under sec 40(a) of income tax act.
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16 August 2013
Nowhere in section 40(a) it is provided that interest paid under section 201(A) is disallowed, Please post the relevant extract of act so that we can under stand..
In my opinion Interest on TDS is allowed ,,it is not penalty , it is compensatory only..
Please let me know how to report the same in Form 3cd if it is disallowed..
Thanks & regards
Ganesh babu k
In my opinion Interest on TDS is allowed ,,it is not penalty , it is compensatory only..
Please let me know how to report the same in Form 3cd if it is disallowed..
Thanks & regards
Ganesh babu k
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16 August 2013
Interest on delayed payment of TDS is allowed as an expense.
16 August 2013
@ ganesh babu if clause iii of sec 40(a) does not allow income tax to be deducted as exp since income tax is a charge on income, similarly tds is one of the form of income tax then by what logic int on tds shall be allowed to be deducted as exp?????????
Infact tds itself is not allowed as exo then how come interest on tds shall be treated as exp and allowed to be deducted??????
Infact tds itself is not allowed as exo then how come interest on tds shall be treated as exp and allowed to be deducted??????
16 August 2013
@tushar sampath
Please refer to Section 40(a)(iii) as suggested by you---i didnt found any relevant information in the suggested section by you...
Please let me know what is the reason for disallowance of interest on TDS...and also say how to report the same in form 3cd
Please refer to Section 40(a)(iii) as suggested by you---i didnt found any relevant information in the suggested section by you...
Please let me know what is the reason for disallowance of interest on TDS...and also say how to report the same in form 3cd
16 August 2013
@ganesh babu firstly my name is tushar sampat and not sampath.
secondly if tds is one of the form of income tax then how come logically int on tds is allowed??????pls explain me the reason why u suggested above that it is allowed.
secondly if tds is one of the form of income tax then how come logically int on tds is allowed??????pls explain me the reason why u suggested above that it is allowed.
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16 August 2013
1)Honble Karnataka High Court in the matter of CIT v. Oriental Insurance Co Ltd [2009] 183 TAXMAN 186 {KAR} has held that Section 201(1A) is a provision to levy interest for delayed remittance of the TDS.
2)It is the practice of the revenue that for belated payment of tax for any reasonable cause, the assessee is liable to pay interest at the rate of 1.5% per cent per month.
3)Similarly, for refunds, the revenue pays interest to the assessee. Therefore, the levy of interest under section 201(1A) cannot, at any rate, be construed as penalty.Hence, it will be of immense use to rely on this case regarding the allowance of the Interest on late payment of TDS.
Interest on late payment of tds is allowed
And i also request you to confirm under what section it is disallowed ,,and where to report in 3CD
2)It is the practice of the revenue that for belated payment of tax for any reasonable cause, the assessee is liable to pay interest at the rate of 1.5% per cent per month.
3)Similarly, for refunds, the revenue pays interest to the assessee. Therefore, the levy of interest under section 201(1A) cannot, at any rate, be construed as penalty.Hence, it will be of immense use to rely on this case regarding the allowance of the Interest on late payment of TDS.
Interest on late payment of tds is allowed
And i also request you to confirm under what section it is disallowed ,,and where to report in 3CD
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16 August 2013
Refer sec 2 clause 43 dealing with definition of tax which includes income tax.
Sec 40(a)deals with disallowance of income tax paid as it is not an exp of business and charge on business.
when tds is one of the form of income tax and when income tax paid is disallowed then how int on tds is allowed?
Sec 40(a)deals with disallowance of income tax paid as it is not an exp of business and charge on business.
when tds is one of the form of income tax and when income tax paid is disallowed then how int on tds is allowed?
16 August 2013
How can you say TDS is one of the form INCOME TAX
1)if you think out from the deductor side..income tax is tax on income of Assesse.
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Can you say TDS relates to income of assesse,,Moreover it is the liability attached to deductor to deduct tax and deposit to government
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Because of delay assesse making compensatory payment as interest (please refer to case law provided above reply)
****If it is considered that TDS is also a Income tax, then regular TDS deducted is not at all allowable.
So i am not able to agree with the section provided by you,,,
As far as i know there is no prohibition for disallowance of interest of tds u/s 201(1A)...if it is there please provide the relevant section,,and let me know where to show in Form 3CD if it is disallowed
1)if you think out from the deductor side..income tax is tax on income of Assesse.
.
.
Can you say TDS relates to income of assesse,,Moreover it is the liability attached to deductor to deduct tax and deposit to government
.
.
Because of delay assesse making compensatory payment as interest (please refer to case law provided above reply)
****If it is considered that TDS is also a Income tax, then regular TDS deducted is not at all allowable.
So i am not able to agree with the section provided by you,,,
As far as i know there is no prohibition for disallowance of interest of tds u/s 201(1A)...if it is there please provide the relevant section,,and let me know where to show in Form 3CD if it is disallowed
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16 August 2013
Tds is one of the form of income tax as when we calculate the final tax liability while filling return of income then tds credit is allowed from the final balance of tax payable.
in other words it means tax deducted already is allowed to be deducted while computing final tax liability which means it is a form of income tax only else why tds is allowed to be deducted while computing final income tax liability?????
in other words it means tax deducted already is allowed to be deducted while computing final tax liability which means it is a form of income tax only else why tds is allowed to be deducted while computing final income tax liability?????
16 August 2013
****If it is considered that TDS is also a Income tax, then regular TDS deducted is not at all allowable.
what you say on above ?
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Hope some other expert should confirm the same?
what you say on above ?
.
.
.
Hope some other expert should confirm the same?
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03 October 2014
Interest on TDS is levied under section 201(1A) of the Income tax Act,1961. The
said expenditure will not be allowed as a business expenditure.
Citation: Madras high court decision
in CIT V Chennai Properties & Investments Ltd reported in 239 ITR 435
said expenditure will not be allowed as a business expenditure.
Citation: Madras high court decision
in CIT V Chennai Properties & Investments Ltd reported in 239 ITR 435
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