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How to calculate interest on late payment of TDS u/s 200 (1A)

TDS ( tax deducted at source) payment is one of the important task in finance due to heavy interest on late payment of TDS and heavy fees on late filling of TDS return.

In this post, you will learn following points:

  1. how to calculate interest on late payment of TDS u/s 201 (1A),
  2. How to calculate interest on late deduction of tax deducted at source
  3. How to calculate fees and penalty for late filling of tds return.

HOW to calculate interest on late payment of TDS u/s 201 (1A)?

To understand about calculation of interest on late payment of TDS, we first require to know due date of TDS deposit and interest on late deduction of tds.

DUE date of TDS deposit:

QuarterEnding onTDS payment due date- for non government deductorTDS payment due date for government deductor-paid without challanTDS payment due date for government deductor-paid with challan
April to June30th June7th julydate of deduction7th July
July to Septeber30th speteber7th octoverdate of deduction7th october
October to December31st December7th januarydate of deduction7th january
January to March31st March30th Aprildate of deduction7th April

 

 

Interest for late deduction of tds :

Interset for late deduction of TDS is also leviable if deductor do not deduct TDS while making payment. The interest rate is 1% per month or part of month for the period of delay.

Example for calculation of interest for late deduction tds:

Payment to partyTDS amountDeduction of TDSDelay in deductionCalculationInterest
01/01/20151000004/01/20151 month10000*1*1%100
22/02/20141000028/05/20154 months10000*4*`1%400
22/03/201410000023/03/20151 month100000*1*1%1000
22/02/20141000022/02/2014000

Section 201(1A):

Now, if you pay TDS deducted late, you are required to pay interest at the rate of 1.5% per month or part of month from the date of TDS deduction to the actual date of payment of TDS.

Example of calculation of interest for late payment of TDS :

TDSTDS deduction dateDue dateTDS payment datemonth of delayinterest calcualtioninterest
10,00001/01/201507/02/201504/05/20155 months10000*1.5%*5750
10,00002/02/201507/03/201508/03/20152 month10,000*1.5%*2300
10,00031/03/201530/04/201524/04/2015nilNil0

Due date of TDS return filling :In above example, we can see interest chargeable for delay in payment of tds. In column 2, you can see that 1 day delay can invite 3% interest. The amount is Rs.10000 sot we consider it small but what if the TDS amount is Rs.200000.

Quarternon government deductorgovernment deductor
April to June15th July31st july
July to Septeber15th october31st october
October to December15th january31st january
January to March15th May15th may

 

 

Fees for late filling of TDS return u/s 234E:

Many contrary views are given but the hon’ble high court of bombay  has given decision favoring section 234E.

Fees for late filling of TDS return is 200 per day of delay per statement.The maximum late filling fees should not be  TDS deduction amount.

Example for fees for late filling of tds return:

Supoose Mr. Joy has deducted TDS Rs.20000 and he pay TDS return belated for 111 days. Now penalty will be 111*200 = Rs.22200.But as TDS amount is lower than Fees, Rs. 20000 will be fees for late filling of tds return.

Penalties for late filling of tds return:

Penalty u/s 271H for late filling of TDS return  will also be levied if you file your TDS return late along with late payment of TDS. If you are not accurate with TDS data at least file the statement on due date to avoid heavy peanlty.

The penalty will be levied if you have delayed in filling TDS return for more than 1 year or you have filed incorrect details ( like pan, challan etc.) in TDS statement.

Penalty will be levied from Rs. 10000 to Rs. 100000.

Example for penalty u/s 271H for TDS late filling:

Quarternon government deductorPenalty will be levied from the date below
April to June15th July,201415th July,2015
July to Septeber15th october,201415th october,2015
October to December15th january,201515th january,2016
January to March15th May,201515th May,2016

Tds payment online:

You can pay TDS offline or online through challan. Please be careful in TDS payment also because small mistake can lead to denial of tax credit to deductees. You can pay TDS online through NSDL site. Read the tutorial here- how to pay tds online

Recommended guide for TDS

 

Other important points regarding interest and penalties on TDS:

same interest rate for all deductees:

The due date for payment of TDS is different for government and non government employees but interest rate on late tds payment is same for both. Similarly there is no difference between company and non company deductor while calculating interest.

Same interest rate for all kind of payment:

Nature of deduction of TDS is irrelevant. Deductor has to pay interest at 1.5% no matter the deduction is u/s 194C or u/s 194I.

Tax deducted at source is not only cumbersome for deductors but also creating problems for deductees. Different TDS rates are considered for same kind of payments in day to day transactions. No one has time to read rules of TDS in this busy life. Some are charging 10% and some are 1%. you can get knowledge of latest tds rate chart from here- link.

 

 

 

I have tried to explain all the points regarding interest on late payment of TDS and late deduction of TDS along with penalties and fees for late filling of TDS return. Still if you have any query, ask through comment box. Please share this post with friends to encourage me to write more. I ll back with new informative article. Stay connected with tax masala.

 

 

 

 

 

 

28 Comments

  1. By Shamsoddoha Purkait

    Ma’m, I am a taxpayer. My deductor has shown my gross salary in tds return as ‘Total Amount Paid/Credited’. May I show my actual salary from income (i.e., Gross Salary minus Professional Tax deducted by deductor) in my ITR? Please reply.

    • By admin

      Yes, you can show it gross salary minus professional tax deducted by deductor. Get form 16 part b along with form 16 part A from the employer showing deduction of professional tax.

      • By Shamsoddoha Purkait

        Ma’m, Thank you for your answer. I have one question more. My Form26AS shows the gross salary as ‘Total Amount Paid/Credited’. On filing ITR with ‘Income from salary’ as Gross Salary minus P.T., will it not be a defective one? Please reply.

      • By admin

        Deduct professional tax in return. It is not defective return.

  2. By Arun S

    Ma’am i want to know the complete procedure of Service Tax, Cenvat Credit, Reverse charges mechanism with example

    • By admin

      Read my blog posts on service tax. I am covering the topics.

  3. By Srinivas

    Hi Madam, For tds late payment, i have paid interest for day wise delay from the 1st day of month. What is the process?

  4. By Srinivas

    Actual due date date is 7th Dec 2015. But i have paid on 18th Dec 2015. I have paid interest for 17 days . I think this is wrong, How to rectify this one. plz suggest me.

  5. Dear Sir,

    I have deducted TDS on oct 2015 & paid in Jan 7th in same quater , return also filed on time
    will i am liable for any penalty or interest ?

    • By admin

      TDS should be paid 7th of Next month of deduction. You are liable for interest.

  6. By POOJA

    Hi.We have taken service of CDSL,till half year passed,we did not cross limit for deduction.In month of Dec,we cross limits & we have to deduct tax.We have deducted TDS on aa the bills raised till now.But what is about interest of TDS??From which date we have to pay interest??From bill date to payment date??or from the date we cross limit to payment date??

    • By admin

      If you have deducted TDS on crossing limit, no need to pay interest.

  7. By Vikky

    Tds deducted in the month of march but part payment made up to 30 th April remaining in July how should I calculate interest u/s 201 for late payment please explain with an example . thanks in advance

    • By admin

      I have explained in article for calculation. Plz go through it carefully. I hope it will help.

  8. By SAWANT RAM TARD

    Hi,
    My question is in below table. Now what interest to be paid to Income tax. Because I not deducted tds on this amount. But rest amount tds deducted by me.

    Payment Date Payment amont
    25-06-2015 12000
    18-08-2105 9040
    28-08-2015 13020
    09-09-2015 7620
    Total Payment 41680

  9. By Preethi

    If the date of deduction is 30h April 2014 the due date for payment is 7th May 2014 but i have paid on 15th May 2014 , in this case how many months should i calculate Late payment interest.

    it is for 1 month or 2 months

  10. By Jaswant

    We are government tds deductor, TDS was deposited on 9th December, 2013 Rs.8,38,674/-for the month of November 2013 and 9th June 2014 for Rs.8,25,000/- for the month of May 2014 with challan. Now, I T authorities issued demand notice to deposit the penalty/interest of Rs. 60,044/-. Kindly advise us on this matter.

  11. By Vipin

    Dear Madam, I have received a letter from TRACES for interest of late payment of TDS for about INR 1300. I do not know how to make this payment. Can you please guide how I can make this payment?

  12. I made a payment of Rs. 5,000 in August 2015 without deducting TDS anticipating that the total payment during the year will not be more than Rs. 30,000.00. However, the total payment exceeded the limit of 30000 in the month of March 2016. Now, how much interest do I pay on late payment and deduction of TDS?

  13. By xxx

    Dear Madam, I’ve made the part payment of the property I purchased on 3rd Mar 2016. However, I couldn’t submit the tax using online form 26B.

    Now that I want to pay the TDS-
    – Is there a penalty for late payment
    – If yes, how do I calculate till date

    I am finding it difficult to fill values on form 26B online as it always throws errors.

  14. By Mukund jha

    Respected Mam
    We are travel agent & tour operator arranging air tickets,hotel,pkg,etc.We had deposited service tax a/c code 00441070 for hotel booking & filled return according & also took 90% abatement 026/2012 st and 11(II)but It should be deposited under tour operator code 0040063.now we got scrutiny st-3 return & officer disallow earlier abatement & demand st as per 00441070 with interest & penalty. please advice how can we justify that & penalty & interest applicable or not.Financial year 2015-2016 filled return according to Tour operator.
    Please guide in this regard.

    Thanks

  15. By Mukund jha

    We have taken composite scheme on air tickets.
    0.70% on Domestic air tickets on basic fare
    1.4% on international air tickets on base fare.
    After introduce sbc .50%,how much service tax applicable for Air Travel agent.
    Is it 0.73% & 1.45% correct or not ?

  16. By neeta

    for private limited company if TDS deducted on dt 30/3/16 and payment made on 4/5/16 how much interest to be pay

  17. By shamala

    WE PVT LTD CO TDS IS 5000 I DID NT PAY ON 30/4/16 I PAID 5/5/16 HOW MUCH INT TO BE PAID

  18. By M K Mishra

    Respected Mam
    Can you provide me any draft letter for dropping penalty proceedings U/s. 271H.

    • By admin

      Sorry sir. We cant provide supporting drafts/documents/ notification etc. to readers as we have not such time. My humble request to all readers do not expect this. However, You can google or contact local professionals.

  19. By RAHUL KUMAR

    INTEREST ON LATE PAYMENT U/S……………… WHAT PLS SUGGEST

    • By admin

      Hi, I dont get your question. Please go through the article. It will help.

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