TDS means Tax deducted at source. The concept of TDS was introduced in Income Tax act with an aim to collect tax from the very source of income i.e. when the income is generated. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and deposit the same with the Central Government in the name of deductee and then deductee can claim the same while filing his return of income.
As per the Income tax Act, Tax which has been deducted needs to be deposited with the government within a specified time duration and the same is as under:
Section 200 read with rule 30 defines the rule for depositing the tax deducted by an assessee which are as under:
In case the deductor is a government office:
1. On the same day where the tax is paid without production of an income-tax challan; and
2. On or before seven days from the end of the month in which the deduction is made or income-tax is due under sub-section (1A) of section 192, where tax is paid accompanied by an income-tax challan.
In any deductor is any other person:
1. On or before 30th day of April where the income or amount is credited or paid in the month of March; and
2. For any other month, on or before seven days from the end of the month in which the deduction is made or income-tax is due under sub-section (1A) of section 192.
Thus, TDS deducted in any month needs to be deposited in the next month with the government, thus it is a monthly exercise and if the Tax is not deposited with the government it shall charge Interest on same.
Interest liability on late payment of TDS/ payment after due date:
The interest for late payment of TDS to government as per section 201(1A) of the Income tax act is: 1.5% 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.
Considering the above provisions if a person who is required to pay TDS on 7th of November 2021 for TDS which was deducted in October and since 7th is a Sunday and before that also there are various holidays due to Diwali festival, many people might pay TDS on 8th and this can lead to levy of interest for 2 month i.e. 3% interest on tax amount (1.5% for October month in which TDS deducted and 1.5% for November month in which TDS paid after due date)
Now let’s check if there is any relief from interest on late payment where last date for payment of TDS falls on a Sunday or Public holiday:
Let’s first make reference to General Clause Act, 1897 with reference to this situation which read as under: In this context section 10 of the General Clauses Act, 1897 comes to rescue.
Section 10 in The General Clauses Act, 1897 reads as follows-
10. Computation of time –
(1) Where, by any Central Act or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open:
Provided that nothing in this section shall apply to any act or proceeding to which the Indian Limitation Act, 1877 (15 of 1877) 20 , applies.
(2) This section applies also to all Central Acts and Regulations made on or after the fourteenth day of January, 1887.
According to this section, where any act or proceeding is directed or allowed to be done or taken in any court or office on a certain day or within a prescribed period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the court or office is open.
Speaking about Income Tax Act, there is no specific section or rule which protects the taxpayer from payment of interest on late payment of TDS when the due date falls on a public holiday or a Sunday.
In the past there have been various circulars and judgements but all of them have been about filing of Income tax return or paying Income tax in the pre-online era and the circulars have been very specific about the relaxations.
Hence, it would be very difficult to say if such circulars and judgements would hold good today as well.
Various circulars issued by CBDT in relation to relaxation of Income tax return filing of payment of tax are as under:
Circular No. 639 Dated 13th November 1992.
Circular No. 676 dated 14th January 1994.
Order of the CBDT under section 119 dated 29th July 2016.
Although the general clauses Act can help save you from this interest on late payment of interest but it is advisable to make the payment of TDS within due time i.e. 7th in order to avoid minimum 3% interest payment on late payment of TDS and any litigation.
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