Tds late payment - regs

@ Ashok: Again my question is completely different. Let me ask the same question again to you too. If you say that in this situation 3% interest is applicable, then could you give me one instance where 1.5% interest is applicable? This is all I want to know

@ Poornima.....Yes dear....in the same given question ,1.5% interest is applicable. Since tds was deducted on 30th. therefore day of 30th have be be ignored and next day is to be considered. i.e. 1st day of next month. Therefore interest would be charged @ 1.5 % for one month.  This is the instance itself. Read my last answer, i mentioned it.

Yeah, 3% would have been IF deduction date had not been 30th. 

E.g. 25/06 is deducton date and deposit date is 08/07. in this case 2 months intt would be charged. from 26th June to 8th July. 

If deduction had been made on 30/06 then we had to consider 01/07 to 08/07 i.e. single month. 

in both the above cases, deduction date is to be ignored and for interest wala period shall be taken from next day of deduction date.

I hope now it's okay.

Now even more confused I'm because earlier you stated that interest is payable from date of deduction but now saying from next day after date of deduction. Which is correct?

@ Poornima.... look it's simple...E.g TDS deducted on 25/06/2016 and deposited on 08/07/2016. Now section 201(1A) says in case of late deposit of tds, interest shall be charged from the date of deduction to actual deposit date.

so in this case, period shall be covered from 26/06/2016 (not 25/06) to 08/07 (actual deposit date). Here both months are incomplete, so we will consider it full month. 

June month and july month.

Now intt shall be paid @ 1.5% for 2 months.

:)

Don't you think your statements are contradictory? Hope you agree with the words INTEREST IS PAYABLE FROM DATE OF DEDUCTION TILL DATE OF PAYMENT. If yes, take your example, date of deduction is 25/06 and date of payment is 08/07. In this case, why 26/06 should be considered as date of deduction for the purpose of interest computation and why not 25/06? What I understand from literal meaning is that date of deduction is the actual date of deduction which is 25/06 in this case. If so, why 26/06 to be considered?

Correction :  oh sorry. yes, deduction date shall be considered. not next day.   means deduction day will be first day.

It's okay. Never mind. Could you now give me one example where 1.5% interest would be applicable because your earlier example (of 30/6) is not valid now?

haha....i think No incidence does exist now. in each case atleast 2 month's intt. would be charged. even on last day tds is deducted. :D

Don't you think this is strange ? If this is the case, why would anyone make such a law!!!! Due to this reason I feel the answer for the first post here is 1.5% (not 3%). Moreover, even justification report (generated by TRACES) states 1.5% only.

Now let me justify my answer. Interest @ 1.5% pm or part thereof means if interest is payable for say 35 days, then it would be treated as 2 months (assuming 31/30 days a month + remaining 4/5 days also as a month because part is treated as a month). Thus, I assume my answer in this case is correct . Hope you agree.

Hmm you mean first of all No. of days would be calculated and then months would be made from days. so in given case 9 days are there. so it's 1 month and intt. 1.5%.. hainn ?

yes. exactly you are right  No. of days would be seen first, if exceeds 30 or 31 days then second month would enter. otherwise single month.   YES YES the calculation in given question and your answer is correct. :)

Yeah perhaps something like this. Otherwise, by no other means I could find meaning for that 1.5%. So I assume this is how it is arrived at. Because if you consider indirect tax like ED/VAT etc, interest is paid proportionately for no. of days of delay and no rounding of part of the month is done. Hence, I feel this might be correct. Also have seen some video from some expert on direct tax who has also said the same.

Okay. 

Poornima Ji,one thing I wanted to ask whether Income Tax Department provides any relaxation for Holidays, as 7/7/2016 was Id-ul-fitr, therefore many have failed to deposit TDS on 07.07.2016.

Specific provision is made in case of 234B and 234C vide circular (https://incometaxindia.gov.in/Communications/Circular/910110000000001036.htm) wherein payment on next working day would be considered as compliance if last day is a holiday. But I have not come across specific provision w.r.t. TDS. If one can consider the above w.r.t. to TDS too, it could be done I think. But it is debatable because now TDS payments can be made online.