Interest on late payment of TDS, is applicable at following rates by simple interest rate method.
A) period prior to 01.04.08 interest is chargeable @ 12 per cent per annum.
B) after .01.04.08 interest is chargeable @ 1 per cent for every month or part of the month ,means full month interest will be charged for fraction period of month
- while calculating interest TDS amount payable on which interest is to be calculated (principal amount) should be rounded of to nearest multiple of 100 ignoring fraction of Rs.100.
- Interest will be charged on the amount payable form the date on which such tax deductible to the date of actual payment.
- Means while calculating period for interest purpose ,the period prescribed for making the payment to the credit of central government is not to be excluded.
- Interest liability is absolute and mandatory and should be deposit through self assessment and assessing officer can not exempt from interest liability.
- With effect from 1.6.2006 ,this interest must be paid on self assessment basis by the person every quarter before furnishing the quarterly return.(form 24Q/26Q/27Q)
Now ,why I am saying one day dealy cost you 2%???
As per point 2 ,if Tds has been paid late then interest will be applicable
- from the date of deduction of TDS/date on which Tds is Deductible
- To date of actual payment of TDS.
- 01.01.2009 to 01.02.09-One month.
- 02.01.2009 to 08.02.09-part of month =one month
Further Interest on Tds rate has been Increased By Finance Act 2010 From 01.07.2010.Summarry of new Provisions is given below
Summary of New provision
Interest up to 30.06.2010
- For late deduction of Tax deduction at source-(rate 1 % per month or part thereof)
- For late deposit of TDS after deduction (rate 1 % per month or part thereof)
- For late deduction of Tax deduction at source-(period date from tax deductible to date of actual deduction )(rate 1 % per month or part thereof)
- For late deposit of TDS after deduction (period :date from tax deducted and date of actual deposit)(rate 1.5 % per month or part thereof)