{"id":20885,"date":"2020-12-02T12:12:07","date_gmt":"2020-12-02T06:42:07","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=20885"},"modified":"2020-12-02T12:16:32","modified_gmt":"2020-12-02T06:46:32","slug":"tds-interest-on-late-payment","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/tds-interest-on-late-payment\/","title":{"rendered":"What is meant by TDS Interest on Late Payment?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">There are various provision under Income Tax Act that provide liberty for paying tax after the due date , however the condition is to pay interest on late payment delay. Such provision interest on delay in <a href=\"https:\/\/corpbiz.io\/tds-return-filing\"><strong>filing TDS return <\/strong><\/a>of income mentioned under <strong><em>section 234A<\/em><\/strong>, interest on default in payment of advance tax mentioned under <strong><em>section 234B<\/em><\/strong>, interest on deferment of payment of individual instalment or instalments of advance tax mentioned under <strong><em>section 234C<\/em><\/strong>, and interest for an excess refund granted to a taxpayer under <strong><em>section 234D<\/em><\/strong>. Therefore, provisions pertaining to TDS interest fall under <strong><em>section 234B, 234A, 234C and 234D<\/em><\/strong>.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/tds-interest-on-late-payment\/#Failure_to_Collect_tax_at_sourcedelay_in_Payment_of_tax\" >Failure to Collect tax at source\/delay in Payment of tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/tds-interest-on-late-payment\/#The_provisions_related_to_due_date_of_payment_of_TDS_to_credit_of_Government\" >The provisions related to due date of payment of TDS to\ncredit of Government<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/tds-interest-on-late-payment\/#An_Interest_for_failure_to_deduct_TDS_and_Delay_in_payment_of_TDS\" >An Interest for failure to deduct TDS and Delay in payment\nof TDS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/tds-interest-on-late-payment\/#TDS_Interest_in_Case_deductee_Pays_a_Tax\" >TDS Interest in Case deductee Pays a Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/tds-interest-on-late-payment\/#The_Provisions_related_to_due_date_of_Payment_of_TCS_to_a_Credit_of_Government\" >The Provisions related to due date of Payment of TCS to a\nCredit of Government<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/tds-interest-on-late-payment\/#An_Interest_for_failure_to_collect_tax_at_source_and_delay_in_payment_of_TCS\" >An Interest for failure to collect tax at source and delay\nin payment of TCS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/tds-interest-on-late-payment\/#An_Interest_in_case_if_a_buyer_or_Licensee_or_Lessee_has_Paid_the_Tax\" >An Interest in case if a buyer or Licensee or Lessee has\nPaid the Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/tds-interest-on-late-payment\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Failure_to_Collect_tax_at_sourcedelay_in_Payment_of_tax\"><\/span>Failure to Collect tax at source\/delay in Payment of tax<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The interest levied for failure to collect\ntax at source\/delay in payment of tax collected at source mentioned under <strong><em>section\n206C (7)<\/em><\/strong> and interest levied for failure to deduct TDS and delay in\npayment of TCS mentioned under <strong><em>section 201(1A)<\/em><\/strong>.<\/p>\n\n\n\n<p>There is provision related to interest on failure\nto deduct tax at source and delay in payment of tax deducted at source mentioned\nunder <strong><em>section 201(1A)<\/em><\/strong> and interest on failure to collect tax at\nsource and delay in payment of tax collected at source mentioned under <strong><em>section\n206C (7)<\/em><\/strong>. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_provisions_related_to_due_date_of_payment_of_TDS_to_credit_of_Government\"><\/span>The provisions related to due date of payment of TDS to\ncredit of Government<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before knowing the provisions related to levy of interest for failure to deduct tax at source\/delay in payment of the TDS, it is necessary to know the provisions related to a due date for payment of TDS to a credit of Government account. Under Income tax Act from<strong><em> Section 192 to 195<\/em><\/strong> is for payments on which tax is to be deducted by a taxpayer. The tax deducted by a taxpayer (i.e., a non-Government payer) must be paid to a credit of Government as follows:-<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"1024\" height=\"341\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/The-provisions-related-to-due-date-of-payment-of-TDS-to-credit-of-Government-1024x341.png\" alt=\"due date of payment of TDS\" class=\"wp-image-20900\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/The-provisions-related-to-due-date-of-payment-of-TDS-to-credit-of-Government-1024x341.png 1024w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/The-provisions-related-to-due-date-of-payment-of-TDS-to-credit-of-Government-300x100.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/The-provisions-related-to-due-date-of-payment-of-TDS-to-credit-of-Government-768x256.png 768w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/The-provisions-related-to-due-date-of-payment-of-TDS-to-credit-of-Government.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"An_Interest_for_failure_to_deduct_TDS_and_Delay_in_payment_of_TDS\"><\/span>An Interest for failure to deduct TDS and Delay in payment\nof TDS<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to <strong><em>section 201<\/em><\/strong>, if any\nperson fails to deduct the tax wholly or partially who was liable for such\ndeduction has to pay simple interest in the form as mentioned below:<\/p>\n\n\n\n<ul><li>Interest must be levied at <strong><em>1% <\/em><\/strong>for every month or part on an\namount of such tax from a date on which such tax was deductible to a date on\nwhich such tax was deducted.<\/li><li>Interest must be levied at <strong><em>1.5%<\/em><\/strong> for every month or part on an\namount of such tax from a date on which such tax was deducted to a date on\nwhich such tax was actually remitted to a credit of Government.<\/li><\/ul>\n\n\n\n<p>In\nother words, interest shall be levied at <strong><em>1%<\/em><\/strong> for every month or part of a\nmonth for delay in the deduction and at <strong><em>1.5%<\/em><\/strong> for every month or part for\ndelay in the remittance after deduction.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TDS_Interest_in_Case_deductee_Pays_a_Tax\"><\/span>TDS Interest in Case deductee Pays a Tax<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According\nto <strong><em>section\n201<\/em><\/strong>, a taxpayer who fails to deduct whole or part of TDS must be treated\nas an assessee-in-default. However, a taxpayer who fails to deduct whole or part\nof the tax made to a payee will NOT be deemed to be an assessee-in-default in\nrespect of tax not deducted by him, after satisfying the following conditions:<\/p>\n\n\n\n<ul><li>A recipient has furnished his return of income under <strong><em>section\n139<\/em><\/strong>.<\/li><li>A recipient has taken into account the above income in its return of\nincome.<\/li><li>A recipient has paid the taxes due on an income declared in such\nreturn of income.<\/li><li>A recipient furnishes the certificate to the effect by an accountant\nin <strong><em>Form\nNo. 26A.<\/em><\/strong><\/li><\/ul>\n\n\n\n<p>In\nother words, in case of a partial deduction of TDS or any short deduction of\ntax a taxpayer will not be treated as an assessee-in-default. However, in such\ncase, even if a taxpayer is not treated as an assessee-in-default, he will still\nbe liable to pay interest under <strong><em>section 201(1A)<\/em><\/strong>. In this case, interest\nmust be payable from a date on which such tax was deductible to a date of furnishing\nof return of income by such payee. An interest in such a case will be levied at\n<strong><em>1%\nfor every month or part of month<\/em><\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Provisions_related_to_due_date_of_Payment_of_TCS_to_a_Credit_of_Government\"><\/span>The Provisions related to due date of Payment of TCS to a\nCredit of Government<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Under <strong><em>Section\n206C<\/em><\/strong> there are various provisions on which tax has to be collected at\nsource. The tax so collected must be paid to the Government within a period of <strong><em>7\ndays<\/em><\/strong> from last day of a month in which the tax is collected at source.\nWhen it is collected by an office of Government then it must be paid to the Central\nGovernment on the same day. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"An_Interest_for_failure_to_collect_tax_at_source_and_delay_in_payment_of_TCS\"><\/span>An Interest for failure to collect tax at source and delay\nin payment of TCS<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According\nto <strong><em>section\n206C(7),<\/em><\/strong> if a person is responsible for collecting tax does not collect\ntax or after collecting tax fails to pay to the Government within due date\nspecified, then he must be liable to pay simple interest at a <strong><em>rate\nof 1% <\/em><\/strong>per monthor part on an amount of such tax.\nAn interest will be levied for a period from a date on which such tax was\ncollectible to a date on which tax was actually paid.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"An_Interest_in_case_if_a_buyer_or_Licensee_or_Lessee_has_Paid_the_Tax\"><\/span>An Interest in case if a buyer or Licensee or Lessee has\nPaid the Tax<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According\nto <strong><em>section\n206C (6A),<\/em><\/strong> a taxpayer who fails to pay tax whole or part of the TDS\nmust be treated as an assessee-in-default. However the collector who fails to\ncollect whole or part of TDS (other than TCS referred under sub-section 1F, 1G and\n1H) must NOT be deemed to be an assessee-in-default in respect of tax not\ncollected by him, in case a buyer or licensee or lessee from whom tax is\ncollected satisfies the mentioned conditions:<\/p>\n\n\n\n<ul><li>In case he has furnished his return of income under <strong><em>section\n139<\/em><\/strong>.<\/li><li>In case he has taken into account that amount for computing income in\nsuch return of income.<\/li><li>In case he has paid tax due on an income declared by him in such\nreturn of income.<\/li><li>In case he has furnished a certificate to effect from an accountant in\n<strong><em>Form\nNo 27BA<\/em><\/strong>.<\/li><\/ul>\n\n\n\n<p>In other\nwords, in case of the non collection of TDS or short collection of tax, if conditions\nare satisfied, then a person responsible to collect TDS will not be treated as\nan assessee-in-default in respect of tax not collected or short collected by him.\nThe interest will be payable from a date on which such tax was collectible to a\ndate of furnishing of return of income by such buyer or licensee or lessee.\nInterest will be levied at <strong><em>1%<\/em><\/strong> for every month or part of a\nmonth. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to the <strong>Income-tax Act<\/strong><sup><a href=\"https:\/\/www.incometaxindia.gov.in\/pages\/acts\/income-tax-act.aspx\"><strong>[1]<\/strong><\/a><\/sup>, the TDS is required to be deducted at a prescribed rate and then deposited with the government. While the TCS, the person receives the payment must collect tax from the person making payment and deposit thereafter with the government. Both must be timely paid otherwise liable for interest on late payment. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/form-16b-tds-certificate-regarding-sale-of-property\/\">\nForm 16B \u2013 TDS Certificate Regarding Sale of Property\n<\/a><\/mark><\/p>\n\n","protected":false},"excerpt":{"rendered":"<p>There are various provision under Income Tax Act that provide liberty for paying tax after the due date , however the condition is to pay interest on late payment delay. Such provision interest on delay in filing TDS return of income mentioned under section 234A, interest on default in payment of advance tax mentioned under [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":20897,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[237],"tags":[1270],"acf":{"service_id":"51"},"authorName":"Soumya Bajpai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/0.jpg","authorDescription":"Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.","postViews":4249,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/20885"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=20885"}],"version-history":[{"count":21,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/20885\/revisions"}],"predecessor-version":[{"id":20909,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/20885\/revisions\/20909"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/20897"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=20885"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=20885"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=20885"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}