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Wrong Calculation of Interest u/s 201(1A) by TDS CPC |
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Wrong Calculation of Interest u/s 201(1A) by TDS CPC |
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Traces is calculating Interest u/s 201(1A) on a wrong footing. Section 210(1A) states as under : “(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest, - (i) at one per cent 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 is deducted; and (ii) at one and one-half per cent 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 is actually paid. It is clear from Sec 201(1A)(ii) that the interest should be calculated from the date of deduction to the date of payment and it is to be converted to months, e,g, if delay is for less than 30 days (a month) even 1 day 1 month interest and if it is more than 30 days but less than 60 days : 2 months and so on. The Traces is calculating interest on month to month basis. E.g. even if TDS was deducted on 31.05.13 and paid on 08.06.13 (due date is 07.06.13), interest is being charged for 2 months instead of 1 month as per statute. Had the intention of the Statute had been to demand tax on monthly basis, the wording should have been “from the month in which such tax was deducted to the month in which such tax is actually paid”. CA Kamal Kumar Agarwal, 9832022225
By: KAMAL AGARWAL - December 10, 2013
Discussions to this article
Traces is calculating Interest u/s 201(1A) The act is clear that the interest should be calculated from the date on which tax was deducted to the date on which such tax is actually paid. Part of the month will be treated as a month. The intention of low is not to collect 2 months interest for two part of the months. So the calculation of interet U/s 201 (1A) by cpctds is wrong & bed in the eye of low.
Traces is calculating Interest u/s 201(1A) : Is Correct The section indicate interest on delay payment is to be paid from the date of deduction to date of payment. In the given example if TDS deducted on 30.5.13 or 31.5.13 and deposited on 8.6.13- In such case intt of late TDS deposit for 2 month is correct as Intt is due for May 13 and Jun 13, in such case due date of payment does not have any impect. Due date is applicable only if a person is making payment with in the time allowed. CA Pradeep Jain 09810597050
To the best of my opinion the CPC is calculating correct Interest. The governing rule for interest calculation is reproduced below :
i am fully agree with Mr kamal Agarwal that traces is calculating intest u/s 201(1A) by on a wrong footing. in this regard, i would like to bought to your notice that Allahabad Highcourt in case of "Commissioner Of Income-Tax vs Laxmi Rattan Cotton Mills Co. Ltd. on 4 April, 1973" (Equivalent citations: 1974 97 ITR 285 All) given decision that month means period of 30 days and not month as per general clause act. however, this decision is given in case of dispute arise in interpretation of Sec 271(1)(a)(i) but in my view same is well applicable for interpretation of month u/s 201 (1A).
I was download a justification report for Quarter-3 of FY 2015-16, and in this file traces charged interest of 2 month, where Date of Deposit is 12-Feb-16 and Due Date of Deduction is 31-Dec-15. In normal course 3 month are coming for 31-Dec-15 = 1 01-Jan-16 to 31-Jan-16 = 1 01-Feb-16 to 12-Feb-16 = 1 Total =3. Here i am unable to understand how are count 2 month by traces instead of 3 month. someone can be understand to this calculation.
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