Interest on tds

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2013 I had deducted TDS today on the bill dated 23.09.13. TDS amount is Rs.674. This amount would be deposited in the next month before 7th december.Please calculate interest on TDS

CA.Shubhneet Kaur

CA.Shubhneet Kaur (Expert)
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22 November 2013 interest is Rs. 14 (1%p.m on 2 months delay in tds deduction)

Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2013 and for deposit?????

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CA.Shubhneet Kaur

CA.Shubhneet Kaur (Expert)
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22 November 2013 Interest on Late deposit is 1.5% p.m.
It is to be calculated for the delay from due date of deposit i.e. within 7 days from the end of the month in which tax is deducted.
So if u deposit the tax after the due date i.e.7th dec, interest shall be applicable.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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22 November 2013 Dear Parul,

When did you make the payment to the party? 23 Sept or today?

Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2013 Mr.nitin payment to the party has already been made on 23.09.13.....i know from 23.09.13 to today tds for late deduction will be 1% for 2 months but i am confused about latd deposit interest from when it is to be computed??????

Nikhil Kaushik

Nikhil Kaushik (Expert)
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22 November 2013 well there lies the confusion.

1. even if you make payment on 30 of a month and deposit TDS on 8th of the next month, interest applied is for 2 months. Going by that logic, interest @ 1% is to be levied for three months.

2. Thereafter interest at 1.5% shall be applicable.

I would suggest that either you pay the TDS today itself. or show deduction on 7th December only. this way 1.5% doesn't get invoked. In such a scenario, if TDS is deducted and paid on 7th, your interest liability shall be 1% each for 4 months.

In case you deduct today, it would 4.5%.

Other experts may pitch in.

Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2013 My opinion is deduct tds in the month of november and interest would be:-
1% from 23.09.13 to 22.11.13-2 months=2%
1.5% from 22.11.13 to 7th dec.-1 month-1.5%
Total interest=3.5%

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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22 November 2013 see what you stating is absolutely correct. However, income tax department calculates in its own way. For eg, if you deduct tax on 30 November and pay on 8 December and pay interest for a month, they will send you notice for short deduction as they believe you are liable for 2 months, November and December. This leads to a lot of litigation.

Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2013 you mean to say that 1.5% also would be for 2 months.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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22 November 2013 i mean to say that it appears that income tax department does it calculation in this manner:

23 Sept - 30 Sept - one month

1 October - 31 Oct - one month

1 Nov - 22 Nov - One month

Thus three months

because whenever we receive short deduction notices, they reflect this sort of calculation only.

CA.Shubhneet Kaur

CA.Shubhneet Kaur (Expert)
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22 November 2013 I agree with Parul.

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Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2013 so finally interest rate batao kitna hoga

Nikhil Kaushik

Nikhil Kaushik (Expert)
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22 November 2013 well, I would just respectfully disagree!!

Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2013 Mr.Nitin aap bas mujhe 1.5% bata do kab se kab tak ka lagega???????

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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22 November 2013 Parul Ji,

Please refer to this http://www.simpletaxindia.net/2013/04/non-deduction-late-deposit-of-tds.html

this should help you in computing interest payable.