Tds interest sec 201

Dear Ankur

thanks

but when should company deposit the tds of Rs. 200 with tds interest.

i feel company should deposit Rs. 200 along with tds interest on 18th june.

and tds of Rs. 600 on 7th jul

am i right

yes you are absolutely right

Dear Ankur

just noticed one thing in your reply.

you have taken rate of interest as 1.5%.

1.5% rate of interest is in cases where deductor deducts tds but doesnt deposit by due date.

mine is a case where deductor hasnt deducted tds. in such cases interest rate remains 1%.

please note.

thanks

Hi all,

Rs. 800/- is required to be paid on or before 7th July 2014 to avoid the interest.

Company is not required to pay any interest on Rs. 200/- as there was no liability on the company at the time of credit of Rs. 20000/- (Check 1st proviso to section 194 C (3). The liability arose on 18th June 2014 when the aggregate amount exceeded Rs. 75000/- and company is required to deduct tax at source at that time only on aggregate amount of Rs. 80000/-. Hence there is no point of paying interest in both the cases but to avoid the interest, company should deposit both amount of TDS (Rs. 200 + Rs. 600) on or before the due date which is 7th July in this case. It would be undue hardship to the assessee if interest is charged on Rs. 200/-.

Check the proviso to section 194 C (3). And even practically all are doing this.

Regards

Anubhav Vishnoi

194C (5) :  No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed [thirty] thousand rupees

Anubhav I agree with you that practically doing the same practic but income tax department sending the notice under section 194C (5) (Likely to be credited)

While paying the amount on 1 april he is not liable to pay tds and there were no liabilities for the future payment.(no amount is likely to be paid in future at that time). So I think there is no need to deduct the tds for Rs.20000.

Dear Akhil

the company didnt deduct TDS on 20000 because it didnt knew then.

but once it entered into second contract and the value exceeded rs. 75000, the company must deposit tds on rs. 20000.

the intention of section is very clear if teh contract value is less than equal 30000, no need for tds but if the value of total contracts i likely to exceed rs. 75000 then tds has to be deducted.

the words of essence is 'likely to be credited'

Dear Shivani there are certain proviso to section 194C. Kindly check the bare act.

Ankur could you please quote few references of case laws regarding interest on tds from 1st credit/payment so that position can be clear and could be applied practically as well. Because i did not come accross any case where department raised demand of interest on the 1st credit. Income tax department is free to issue notices ignoring the law.

Thanks