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- (Q1.)What is Late deduction?
- When tax is deducted later than the date on which it was deductible (i.e. date of payment /credit), Late Deduction interest will be charged.
As per the Income Tax Act, Date of Deduction should be the date of payment /credit on which payment/credit is made to the Deductee. Late Deduction interest will be charged at the rate of 1% per month or part of the month from the date of payment /credit till the date on which TDS is actually deducted. - Procedure to close default of interest on Late Deduction as mentioned below:
- Default amount will have to be deposited through Challan number ITNS - 281 by ticking minor head '400'.
- After payment of Challan, User needs to add challan to the statement using "Online Correction Functionality" - "Add Challan to the Statement" available on TRACES (Please refer E-Tutorial of "Add Challan to statement" available on TRACES website).
For closure of Late Deduction default, fill up the amount in 'Interest' column and "Amount claimed as Interest" column in Challan details through Online Correction Functionality by clicking on "Request for Correction" under "Default" tab and select "Pay 220I,LP,LD, Interest ,Late Filing Levy" category.
- Once the Challan is added to the statement, further corrections can also be done by downloading latest Conso File from TRACES.
- Interest on Late Deduction is calculated at the rate of 1% per month or part of the month from the date of payment /credit till the date on which TDS is actually deducted. Example -
- Interest on Late Deduction will be calculated at the rate of 1% per month or part of the month from the date of payment /credit till the date of filing of Income Tax Return (ITR) by the deductee. Example -
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|
| Amount Paid / Credited | TDS Deducted | Date Of Payment | Due Date Of Deduction | Actual Date Of Deduction | Period Of Delay (in Months) | Interest On Late Deduction = (Column No. 2 * Column No. 6 *1%) |
| 100000.00 | 10000.00 | 3rd March,2018 | 3rd March,2018 | 14th April,2018 | 2 | 200 |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|
| Amount Paid / Credited | TDS Deducted | Date Of Payment | Due Date Of Deduction | Date of filing of ITR by deducte | Period Of Delay (in Months) | Interest On Late Deduction = (Column No. 2 * Column No. 6 *1%) |
| 100000.00 | 10000.00 | 3rd Dec 2017 | 3rd Dec 2017 | 25th July 2018 | 8 | 800 |
