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.