Logical Interpretation by Ahmadabad ITAT- One month relief of interest in case of delay in payment of TDS

Logical Interpretation by Ahmadabad ITAT- One month relief of interest in case of delay in payment of TDS

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payment of TDS

 One months relief of interest in case of delay payment of TDS

The Hon’ble ITAT – Ahmedabad Bench in the case of Bank of Baroda v. Deputy Commissioner of Income-tax [2017]  (Ahmedabad – Trib.) held that the interest chargeable under section 201(1A) of the Income-tax Act should be levied from the date of deduction of tax to the date on which such tax is actually paid to the Government.

Following are the examples that may help to understand the levy of interest u/s. 201(1A):-

  1. Date of Deduction – 05-11-2017

Due Date of depositing TDS – 07-12-2017

Actual Date of Deposit – 07-12-2017

Period of Interest – No Interest shall be levied as the TDS is deposited within the prescribed time limit.

  1. Date of Deduction – 05-11-2017

Due Date of depositing TDS – 07-12-2017

Actual Date of Deposit – 10-12-2017

Period of Interest – 2 Months, as the period from which the tax is deducted to the date on which such tax is actually paid exceeds one month.

  1. Date of Deduction – 15-11-2017

Due Date of depositing TDS – 07-12-2017

Actual Date of Deposit – 12-12-2017

Period of Interest – Period from which the tax is deducted to the date on which such tax is actually paid does not exceeds one month. Accordingly, only one month’s interest u/s. 201(1A) shall be levied.

  1. Date of Deduction – 05-11-2017

Due Date of depositing TDS – 07-12-2017

Actual Date of Deposit – 10-01-2018

Period of Interest – 3 Months.

Conclusion: Levy of interest u/s. 201(1A) for the second month can arise only if the period of time between the date on which tax was deducted and the date on which tax was paid to the Government exceeds one month.

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