TDS Interest if Wrong Date of Deduction in TDS Return
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
Example 1
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 answer
Date 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 answer
In 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
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 answer
Date 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 answer
In 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