TaxTMI 
TaxTMI 
TaxTMI 
Extract of the section 201(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,
and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200:”
Now the month mentioned over here is not defined under the act and Traces/ CPC-TDS considere month as a British calendar month.
Where as in the well settled cases the ITATs have considered the month be 30 daysinstead of British calendar month
The Case laws are
ECONOMIC LAWS PRACTICE VERSUS CIT (APPEALS) - 59 MUMBAI [2019 (12) TMI 1032 - ITAT MUMBAI]
All the above-mentioned cases have referred to the decisions of the High Courts (Specially Gujarat High Court) and the Apex court to define months as to what it should be.
The below mentioned table shows the present practice of Traces/ CPC-TDS
As per Traces/ CPC-TDS[Month = British calendar month] | Rs. | Rs. | Rs. | ||||||||
Date of Credit / Payment (earlier) | TDS Amount | Actual Date of Deduction | Due date of Payment | Actual date of Payment | Late deduction(in Days) | Late deduction(in months) | Interest for late deduction @1% p.m. | Late payment (in days) | Late payment (in months) | Interest for late payment @ 1.5% p.m. | Total Interest |
25/04/2022 | 100 | 30/04/2022 | 07/05/2022 | 07/05/2022 | 0 | 0 | - | 0 | 0 | - | - |
25/04/2022 | 100 | 30/04/2022 | 07/05/2022 | 08/05/2022 | 5 | 1 | 1.00 | 8 | 2 | 3.00 | 4.00 |
25/04/2022 | 100 | 25/04/2022 | 07/05/2022 | 08/05/2022 | 0 | 0 | - | 13 | 2 | 3.00 | 3.00 |
As per Case laws[Month = 30 days] | Rs. | Rs. | Rs. | ||||||||
Date of Credit / Payment (earlier) | TDS Amount | Actual Date of Deduction | Due date of Payment | Actual date of Payment | Late deduction(in Days) | Late deduction(in months) | Interest for late deduction @1% p.m. | Late payment (in days) | Late payment (in months) | Interest for late payment @ 1.5% p.m. | Total Interest |
25/04/2022 | 100 | 30/04/2022 | 07/05/2022 | 07/05/2022 | 0 | 0 | - | 0 | 0 | - | - |
25/04/2022 | 100 | 30/04/2022 | 07/05/2022 | 08/05/2022 | 5 | 1 | 1.00 | 8 | 1 | 1.50 | 2.50 |
25/04/2022 | 100 | 25/04/2022 | 07/05/2022 | 08/05/2022 | 0 | 0 | - | 13 | 1 | 1.50 | 1.50 |
I hope the matter is now very clear from the above table that TDS authority is charging interest from the assessee and what the interest should be.
Thank you
Pradeepta Pyne