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TDS Interest if Wrong Date of Deduction in TDS Return
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We know that

TDS is to be deducted at Invoice Received

or

Payment Made, whichever is earlier

If we mention wrong date of deduction,then 1% interest is payable from

Last Date of Deduction to Actual Date of Deduction

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Example 1
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Suppose Invoice Received of 20 April of 50000 of Maintenance Charges

Payment made on 25 April after deducting 2%TDS

What is date of Deduction?

View AnswerDate of Deduction is

Earlier of

Bill--->20 April

or

Payment-->25 Apri

whichever is earlier

i.e. 20 April

Suppose TDS Actually deducted on payment on 25 April and deposited by 7 May

How much Interest is payable

View AnswerIn this Case

Date of Deduction is 20 April

Actual Date TDS is Deducted is 25 April

No of Months Late=1 (24 APRIL TO 25 APRIL is 1 Month)

Interest to be paid @ 1% =1000*1%*1=10

Sometimes both 1.5% and 1% TDS Applicable

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Example 2
**

Suppose Invoice Received of 20 April of 50000 of Maintenance Charges

Payment made on 1 May after deducting 2%TDS

What is date of Deduction?

View AnswerDate of Deduction is

Earlier of

Bill--->20 April

or

Payment-->25 May

whichever is earlier

i.e. 20 April

Suppose TDS Actually deducted on payment on 1 May and deposited by 7 June

How much Interest is payable

View AnswerIn this Case

Last Date of Deduction is 20 April

Actual Date TDS is Deducted is 1 May

No of Months Late=2

Interest to be paid @ 1% =1000*1%*2=20

Apart from this

Interest @ 1.5% is also payable from

Actual Date of Deduction (1 May)

to

Actual Date of Payment (1 June)

It is 2 months late (May-June)

So interest applicable

=1000*1.5%*2

=30

Total interest=20+30=50

Total Challan=1000+50=1050

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