Dear Forum Members
The following details are provided by me on my understanding of the provisions of the law. If there is any mistake or errors committed on my part please do inform. This will enable me to correct myself as well as would not mislead other forum members of this website.
The following points have to be taken into account while calculating interest for late remittance of TDS.
The following is applicable for financial year ended 31st March 2010
REMITTANCE OF TDS (Section 192, 193, 194A, 194C, 194D, 194G, 194H, 194I, 194J and 195)
TDS deducted on "Non-Salary" during a month has to be remitted on or before 7th of next / succeeding month.
TDS deducted on "Non-Salary" between 1st March to 30th March has to be remitted on or before 7th April 2010.
TDS deducted on "Non-Salary" for which provision if any made on 31st March 2010 (financial year end date) could be remitted on or before 31st May 2010.
TDS deducted from "Salary" during a month has to be remitted on or before 7th of next / succeeding month.
TDS deducted from March 2010 Salary has to be compulsorily remitted on or before 7th April 2010.
PAYMENT OF INTEREST FOR DELAYED REMITTANCE OF TDS
Interest on late payment of TDS, is applicable at following rates by simple interest rate method.
(A) period prior to 01.04.2008 - Interest is chargeable @ 12 per cent per annum.
(B) After .01.04.2008 - Interest is chargeable @ 1 per cent for every month or part of the month, means full month interest will be charged for fraction period of a month.
HOW TO CALCULATE INTEREST IF THERE IS ANY DELAY
(1) While calculating interest TDS amount payable on which interest is to be calculated (principal tds amount) should be rounded of to nearest multiple of 100 ignoring fraction of Rs.100.
(2) Interest will be charged on the amount payable form the date on which such tax deductible to the date of actual payment.
(3) Means while calculating period for interest purpose, the period prescribed for making the payment to the credit of central government is not to be excluded.
(4) Interest liability is absolute and mandatory and should be deposit through self assessment and assessing officer can not exempt from interest liability.
(5) With effect from 1.6.2006 ,this interest must be paid on self assessment basis by the person every quarter before furnishing the quarterly return.(form 24Q/26Q/27Q)
Please note that even one day delay will cost you 2%;
As per Point No.2 (above), if TDS has been remitted late then interest will be applicable from the date of deduction of TDS / date on which TDS is Deductible and upto the date of actual payment of TDS.
For example we have deducted TDS of Rs.1000/- u/s.194C from a contractor / person on 01.01.2010.
The due date for remittance of TDS of Rs.1000/- is 07.02.2010.
If we remit the amount on 08.02.2010 then interest will be applicable from date of deduction, This is because while calculating period for interest on late deposit of tds, period prescribed for making payment to the credit of Central government is not to be excluded.
Therefore Interest period will be calculated as under.
01.01.2010 to 01.02.2010 - One month.
02.02.2010 to 08.02.2010 - part of month = one month
so interest for two months @ 1% per month will becomes 2%, so delay for one day will cost you 2%?!!!
Another example
For example we have deducted TDS of Rs.1000/- u/s.194C from a contractor / person on 05.07.2009
The due date for remittance of TDS of Rs.1000/- is 07.08.2009
If we remit the amount on 07.09.2009 then interest will be calculated for three months
Interest period will be calculated as under.
05.07.2009 to 04.08.2009 - One month.
05.08.2009 to 04.09.2009 - One month
05.09.2009 to 07.09.2009 - part month will be treated as one month
so interest for three months @ 1% per month will becomes 3%, so delay for one day will cost you 3%?!!!
Further while calculating interest the amount of TDS is to be rounded off to the nearest 100.
Hence if TDS deducted is Rs.346/- then you have to calculate interest on Rs.300/-
If TDS deducted is Rs.356/- then you will have to calculate interest on Rs.400/-
with regards
Muralidharan
CAclubindia
