Is interest paid on late payment of TDS allowed as deduction?

Is interest paid on late payment of TDS allowed as deduction?

Explanation: Interest on late payment of TDS is not covered under Section 30-36 of the Act and thus qualifies for consideration u/s 37. Therefore, interest expenses with regard to late payment of taxes, which are compensatory in nature, are eligible for deduction u/s 37 of the Act.

What is the limit of interest for TDS?

TDS rates applicable for resident of India Section 193: Interest on securities. w.e.f 1st April 2019, TDS on the interest income from post offices and bank deposits have increased up to Rs. 40,000 from the present limit of Rs. 10,000.

What is additional late payment interest against the processing of latest correction?

Interest on Late Payment: This is a very Interest shall be levied at 1% 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 was deducted.

How is interest on late payment of TDS calculated?

Interest on Late Deduction = 12300 * 2 months * 1/100 = 246. Under Section 201(1A), you will have to pay interest of 1.5% per month or part of the month, from the Date of Deduction(of TDS) to the Date of Payment. This interest applies to “Non-payment of tax after deduction, either in whole or in part”.

Which expenses are allowed as deduction under section 37?

According to section 37(1) of the Income Tax Act, 1961, any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession …

What is Section 40 A of Income Tax Act?

a) Disallowance of expenditure: As per section 40(a)(i) of the Income-tax Act, any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it is paid without deduction of tax at source or if tax is …

Is interest on income tax allowed as deduction?

Any sum paid on account of Income Tax ( i.e. any rate or tax levied on the profits or gains of any business or profession) is not deductible. Similarly, any interest, penalty, fine for non-payment or late payment of Income tax is not deductible.

How can you avoid paying interest on your taxes?

The only way to avoid paying interest under Section 234C is to pay advance tax on time as per the scheduled dates provided by the Income Tax Department. How much interest is to be paid under Section 234B? Interest under Section 234B is 1% per month or part of the month for default in the payment of advance tax.

Is interest u/s 220 2 can be waived?

The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may reduce or waive the amount of interest paid or payable by the taxpayer under section 220(2), if he is satisfied that: ➢ Payment of such interest has caused or would cause genuine hardship to the taxpayer.

Is interest chargeable on short payment of TDs?

Interest is chargeable on short payment/late payment of TDS. There can be the following scenarios:- When TDS is not deducted Interest at the rate of 1% per month or part thereof, for the period from the date on which TDS is deductible to the date on which TDS is actually deducted.

What is the deduction of interest on late deposits of TDs?

Assessee claimed deduction of interest on late deposits of TDS liability. AO disallowed deduction. TDS amount did not represent tax of assessee but it was tax of party, on whose behalf it was deducted and paid to the Government Exchequer.

What happens if I delay my TDs payment by one day?

Therefore if you delay the payment by one day, you have to pay interest for two months. Consider the case in which you deposit tax one day after the due date. Say, TDS deduction is on 1st August. Then the due date is 7th September. But, you deposit the tax is on 8th September (i.e. one day after the due date).

What is the last date of deposit for TDs in March?

For month of March the last date of deposit is 30th April. The due date for payment in case of TDS on sale of immovable property under section 194IA is 30 days from the end of the month including the month of March. Know more about TDS payment due dates and Interest on late payment check this article.