Interest on late payment of TDS for 4th quarter of FY 2019-20 | Read this and you could save 1 month interest on late payment of interest

As we know because of lockdown all the business and banks were closed and many places are still not fully open and still there are many restrictions.

Also, Ministry has announced various relief and had extended the due date for various compliance till 30.06.2020. However no extension was provided for payment of TDS to government, only the interest rate on late payment was restricted to 0.75% per month or part of month.

The due date for payment of TDS for the month of march was 30.04.2020 and due to lockdown many people were not able to make payment till 30.04.2020 because of which they were liable to pay interest on above TDS payment.

As per section 201, of the Income tax act interest on late payment of interest is as under:

“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,”

After the ordinance the interest rate would be reduced to 0.75% from 1.5% for delay payment of TDS, but as per the original section interest would be charged from date of deduction to the date of actual payment. So let’s assume one makes payment in June so interest would be calculated from March to June for 4 months.

However there is one more relief in the ordinance which is as under:

“the rate of interest payable, if any, in respect of such amount for the period of delay shall not exceed three-fourth per cent. of every month or part thereof;

….

Explanation: For the purpose of this sub-section, “the period of delay” means the period between the due date and the date on which the amount has been paid.

Thus, after the above explanation interest would only be charged for period of delay which would be period between due date and date of actual payment. In this situation same would be April to June.

Hence because of the ordinance not only rate of interest has been reduced but also one month of interest has been saved.

Although, many people would have paid the challan already but if someone has not paid you should consider this and save your money because it is very difficult to get refund under TDS.

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