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Income tax

SUNIL (ACCOUTANT) (167 Points)

23 December 2011

Hi kinldy check the calculation on interest on Tds.

Bill Date 8/4/2011 amount Rs 35000/- on profeesional services.

Tds Amount Rs 3500/-

Interest Rs 420 for 8 month Delay if deposited on or before 25 days of December.

TDS IS DEDUCTED.

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18 Replies

SHASHI KUMAR CG (CA Final - Waiting for results) (40 Points)
Replied 23 December 2011

Hi Mr. Sunil,

your calculation of interest is correct if you would have deducted tax in the month of april, 11 and not paid within due date.

However if you have not deducted tax in April but deducted only in December, then interest would be 1% p.m. which comes to Rs.280/-. @ 8% on Rs.3500/-.

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CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 23 December 2011

Interest calculation is wrong. It should have been calculated on the amount of tax only and not on the entire amount of bill.

muthulakshmi (ca student ) (113 Points)
Replied 23 December 2011

ur calculation is rite...!!

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 24 December 2011

1.3500*1.5/100=35*1.5=5.25pm*8=42.00

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 24 December 2011

Rajesh ji,

The Interest of Rs.420/- is calculated correctly.

In your calculation

(3500/100)35 * 1.5 = 5.25p.m. It should be Rs.52.5 p.m. and not Rs.5.25

hence, 52.5 * 8 months = Rs.420/-

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CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 24 December 2011

Originally posted by : Ketan Waghela
	Rajesh ji, The Interest of 420/- is calculated correctly. In your calculation (3500/100)35 * 1.5 = 5.25p.m. It should be 52.5 p.m. and not Rs.5.25 hence, 52.5 * 8 months = 420/-

yes friend .....

valji (Accounts manager-MBA) (2150 Points)
Replied 24 December 2011

agreee with mr rajesh

Harshal (Article Assistant ) (182 Points)
Replied 24 December 2011

Answer by Shashi kumar is correct

Praveen Kumar (Manager - Finance & Accounts) (189 Points)
Replied 24 December 2011

Interest should be Rs. 420

DHAVAL R ASHAR (AUDIT MANAGER) (100 Points)
Replied 24 December 2011

Interest will be

3500*1.5% X 8 Months (Apr - Nov) + 3500*1%(Dec)= 455

Since due date for TDS deducted on Nov is on or before 7th december.

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CA Mudit Agarwal PGDFM,MCP,IFR (Dy. Manager (Taxation)) (289 Points)
Replied 24 December 2011

In section 201 of the Income-tax Act, for sub-section (1A), the following sub-section shall be substituted with effect from the 1st day of July, 2010, namely:—

“(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,—

(i) at one per cent. for every month or part of a 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 per cent. for every month or part of a month on the amount of such taxfrom the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200.”.

After studying the provision of Sec 201 (1A) (ii), I am of the opinion that interest for non depositing the TDS after deduction thereof, will be charged @ 1.5% from the date of deduction to the date of actual payment of tax. hence the period for charging interest includes the month of deduction as well as month of payment. This provision has been introduced With a view to discourage the practice of delaying the deposit of tax after deduction.

From the study of your problem, it seems that Tax was deducted timly (i.e. in April) but deposited in December. Hence the interest should be charged for 9 months (April to Dec) @ 1.5%. i.e. Rs. 472.50

Nirmal (Employee) (67 Points)
Replied 24 December 2011

Please note Rs 35000 is total amount to be paid..& on it tds is deducted....If the bill consists of service tax then tds is to be deducted on total bill amount including Service tax..

CA Mudit Agarwal PGDFM,MCP,IFR (Dy. Manager (Taxation)) (289 Points)
Replied 24 December 2011

Dear Nirmal.........

First of all I want to tell you that Tax is not deducted on the amount of service tax u/s 194I. If u are making any payment u/s 194J, then only u are liable to deduct tax on the amount of service tax.

Second, I have just cleared the method and the period for charging the interest......If the bill consists the amount of service tax incluing the amount of rent, then tax is to be deducted only on the amount of rent......