How to avoid Interest Defaults TDS default NOTICES


Each e-TDS statement is processed by TIN and defaults are put on web site for deductors to rectify.
In this article, we will examine what is default on account of interest and how it can be avoided
When is interest payable ?
As per income-tax , interest is payable under the following two circumstances
  1. Tax is not deducted , when it was deductible
  2. Tax once deducted, is not paid on or before  due date
When tax is to be deducted
At the time of credit or payment, whichever is earlier
193- Interest on securities
194A- Interest Other than “Interest on securities”
194C- Payment to contractors / sub contractors
194D – Insurance commission
194H – Commission or Brokerage
194G- Commission on sale of lottery tickets
194I- Rent
194J- Professional or technical fees
Before making payment or distribution
194- Dividend
At the time of payment
192- Salaries
194B- Winning from lotteries / crossword puzzles
194BB Winnings from horse races
194EE – Payment from National Saving Scheme
194F Payment for repurchase of units by UTI / mutual funds
194LA: Payment of compensation on acquisition of certain immovable property
What is the Due date of deposit of TDS ?
  • All the TDS deductions made during a month are to be paid on or before7th of the next month. Example : All deductions made during April ,must be paid on or before May 7th, 2010.In case 7th of the month happens to be a Sunday or a bank holiday, then the payment can be made on the next business day.
  • Beginning FY 2010-11 ,for deductions made during the month of March, payment must be made on or before 30th April.
What is the rate of interest ?
W.e.f 01-07-2010
  • From the date when TDS was deductible till date of actual deduction,rate of interest is 1% p.m.
  • For delayed deposit, from date of deduction till actual date of payment, rate of interest is 1.5% p.m
Prior to 01-07-2010
  • From FY 2006-07 onwards for delayed deposit, from date of deduction till actual date of payment, rate of interest is 1.0% p.m
What is the due date of payment  of interest ?
Interest must be calculated and paid before filing of eTDS statement of the quarter.
Quarter 1Jul-15
Quarter 2Oct-15
Quarter 3Jan-15
Quarter 4May-15
How is interest to be calculated ?
  • Interest is to be calculated for every month or part of a month comprised
    in a period, any fraction of a month shall be deemed to be a full month
  • The amount of tax, penalty or other sum in respect of which such interest
    is to be calculated shall be rounded off to the nearest multiple of one
    hundred rupees and for this purpose any fraction of one hundred rupees
    shall be ignored and the amount so rounded off shall be deemed to be the
    amount in respect of which the interest is to be calculated.
Of course, those using TdsPac software from Fast Facts need not worry. Automatic and accurate calculation of interest is available in single click.
Example of Interest Calculation
Date Of PaymentDate of DeductionDue DateDate of DepositDelayed DepositDelayed Deduction
MonthsRateMonthsRate
05/04/201005/04/201007/05/201009/05/201021%--
10/04/201010/04/201007/05/201009/05/201011%--
02/07/201004/08/201007/09/201007/09/2010--21%
02/07/201004/08/201007/09/201015/09/201021.50%21%
Avoiding Interest Default
To avoid interest default
  • Deduct tax at source in time
  • Deposit TDS by due date
  • In case of delayed deduction / deposit ,calculate interest and deposit the same
  • Show such interest properly in eTDS statement
Rectifying Interest Default
  • You may download default notices after logging into your TAN account.
  • Default Notice is a plain excel sheet without any password protection
  • If there is any default on account of non-payment or short  payment of interest, you need to pay up the same
  • After paying , you have to  file correction statement by including the interest payment challan.
Name

2426Q DUE DATE 44AB 44AE 44AF 49A 49AA 54 54B 54EC 54f 80C 80CCC 80CCD 80CCE 80CCF 80E 89(1) aces agricultural land amt on llp bank BANKS bounced cheque BUDGET BUDGETING buyers agreement CA AUDIT LIMIT capital gain carry forward losses challan booked status challan correction changes in challan changes in pan application form changes in pan data CIC CII citizen charter delhi companies tax rates company pan coparcener CORRECTION IN BANK CHALLAN correction in challan correction in etds return COST INFLATION INDEX CREDIT CARD DEDUCTION DEFAULT NOTICES dividend distribution tax (DDT) documents with pan DUE DATE FOR SERVICE TAX RETURN e paymnet of excise duty e-payment of service tax e-return by Legal Heir efiling of return elss etd return rejection ETDS etds return due date etds statement correction exchange traded funds excise return fcnr FESTIVAL SEASON firm tax rates FORM 16A form 24Q DUE DATE FORM 27Q DUE DATE free software er-1 free software st-3 FVU get pan with name and dob gift gold gold etf gratuity taxabilty house HOUSE LOAN house property house purchase agreement purchase house rent calculator house sale how to calculate tds on salary hra hra calculation huf pan huf (hindu undivided family) icai toolbar identity proof income tax challan income tax help toolbar income tax rates income tax rates firms income tax rates llp income tax refund income tax return income tax slabs individual pan INFRASTRUCTURE BONDS inter head adjustment inter source adjustment INTEREST INTEREST ACCRUED ON NSC interest on late closer kvp nsc time deposit post office interest on late deposit interest rate on tds late deposit investment plans itr-v itr-v status joint account kissan vikas patra know your pan kvp late deposit of tds leave travel concession lic life insurance limited liability partnership llp loan against rent long term capital gain ltcg mandatory e filing mat(minimum alternate tax ) minor pan mutual fund statement mutual funds negotiable instrument act new pan application form nri nro nsc NSC INTEREST pan application pan data pan form pan name pan verification pan with name physical gold pio POST OFFICE RB ACCOUNT post office time deposit ppf ppf limit 100000 ppf Limit 70000 or 100000 PREPAYMENT CHARGES proof of residence public provident fund RBI registration at aces relief on gratuity repo rate return verification reverse repo rate REVISED ETDS RETURN revised return RIGHT TO INFORMATION RTI saving bank rate SBI scrutiny cases scrutiny guidlines ay 2010-11 SERVICE TAX SERVICE TAX RETURN DUE DATE NOTIFICATION SERVICE TAX RETURN set off losses SHOPPING short term capital gain stcg SUB CONTRACTOR TAN REGISTRATION tax on gratuity tax on salary income tax rate on llp. tax savings TCS RATES TDS 194 A tds certificate TDS IN COURT CASE TDS ON AGRICULTURE LAND TDS ON COMPENSATION tds on salay TDS RATES TDS RATES 10-11 TDS RATES 11-12 who can sign return WORKS CONTRACTOR
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Income Tax India: How to avoid Interest Defaults TDS default NOTICES
How to avoid Interest Defaults TDS default NOTICES
Income Tax India
http://www.itaxindia.org/2011/09/how-to-avoid-interest-defaults-tds.html
http://www.itaxindia.org/
http://www.itaxindia.org/
http://www.itaxindia.org/2011/09/how-to-avoid-interest-defaults-tds.html
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