Interest on Late Payment of TDS

How to Calculate Interest on Late Payment of TDS

 

Interest will be calculated on the TDS amount in case if you have made late payment of TDS.

 

 

 

 

 

Example

 

X Company has to pay of Rs.1,00,000/-to the vendor towards professional service charges.

 

X Company has deducted TDS on 25th May 2016 of Rs.10,000 (10% on 1,00,000) and paid TDS on 10th June 2016.

 

In the above example X Company should pay TDS before 7th of June 2016 but paid on 10th June 2016.

 

While calculating interest on TDS, you have to consider May 2016 is one month and you have been delayed payment for 3 days from 8th June 2016 to 10th June then the X Company has to pay interest for 2 months i.e. May & June.

 

Interest rate on late payment of TDS is 1.5% per month (p.a.18%)

 

Total interest payable will be 3%

 

You need to calculate interest for 2 months on TDS amount of Rs.10,000

 10,000*3/100 = 300

 

 

 

TDS payment entry

 

TDS on Professional charges 194J Dr 10,000

 

Interest on TDS (10,000*3%) Dr 300

 

To Bank 10,300

 

 

 

TDS is paid through Challan No. /ITNS 281

 

 

Payment of TDS

 

TDS should pay section wise, while making of payment you need to select financial year and section like 194C, 194J & 194H.

 

Visit the below link to pay TDS

https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp

 

 

 

In the above screen shot click on Challan No./ITNS281 then the below e-payment page will appear

 

 

Based on type of deductee you have to select whether Company Deductees (In case of private limited companies) / Non Company deductees (In case of Individual)

 

Select assessment year

 

Tax deduction account number – Once you enter TAN number in this filed your company information will display automatically.

 

Enter your company address

 

 

In the above screen shot you have to select the following fields

 

TDS/TCS Regular Assessment

 

Nature of Payment (194j, 194H & 194C)

 

Net Banking / Debit Card

 

Click on Proceed to pay TDS