INTEREST FOR FAILURE TO DEDUCT TDS/TDS OR DELAY IN PAYNENT OF TDS/TCS

Let’s start with recalling the due dates of Deduction/Collection and Payment (Deposit) of TDS/TCS.

DUE DATE OF PAYMENT OF TDS (TO GOVERNMENT)

TYPE OF DEDUCTOR MONTH DUE DATE
GOVT. OFFICE APRIL TO MARCH IF PAID THROUGH INCOME TAX CHALLAN : TILL 7th OF NEXT MONTH

IF PAID THROUGH BOOK ENTRY : SAME DAY I.E. THE DAY ON WHICH TDS WAS DEDUCTED.

ALL OTHER (I.E. NON GOVT.) APRIL TO FEBRUARY TILL 7th OF NEXT MONTH
ALL OTHER (I.E. NON-GOVT. ) MARCH 30th APRIL

NOTE :

Tax deducted under section 194-IA (i.e., on immovable property), Section 194-IB (i.e. on rent) & Section 194M (i.e., on certain sum paid by an Individual/HUF) should be paid to the credit of the Government on or before 30 days from the end of the month in which deduction is made.

Interest for failure to deduct tax at source/delay in payment of TDS

As per section 201, if any person who is liable to deduct tax at source does not deduct it or after so deducting fails to pay, the whole or any part of the tax to the credit of the Government, then, such person, shall be liable to pay simple interest as given below:

For Delay in deduction of TDS : Interest shall be levied at 1% for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax was deducted.

For Delay in Deposit of TDS : Interest shall be levied at 1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax was actually remitted to the credit of the Government.

In other words, interest will be levied at 1% for every month or part of a month for delay in deduction and at 1.5% for every month or part of a month for delay in remittance after deduction.

DUE DATE OF PAYMENT OF TCS (TO GOVERNMENT)

TYPE OF DEDUCTOR MONTH DUE DATE
GOVT. APRIL TO MARCH IF PAID THROUGH INCOME TAX CHALLAN : 7th OF NEXT MONTH

IF PAID THROUGH BOOK ENTRY : SAME DAY I.E. THE DAY ON WHICH TDS WAS DEDUCTED.

NON-GOVERNMENT APRIL TO MARCH TILL 7th OF NEXT MONTH

Interest for failure to collect tax at source/delay in payment of TCS

As per section 206C(7), if the person responsible for collecting tax does not collect the tax or after collecting the tax fails to pay it to the credit of Government within the due date prescribed in this regard, then he shall be liable to pay simple interest at the rate of 1% per month or part thereof on the amount of such tax.

Interest shall be levied for a period from the date on which such tax was collectible to the date on which the tax was actually paid.

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Tax Shastra is a knowledge-sharing platform for Individuals, Businesses & Professionals, solely managed and guided by Ratan Sarraf, where you can learn your taxes and finance easily.

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