Important Updates For Budget 2023 Include The Following:

• Section 194BA: Online Gaming Income: TDS is introduced on income from online gaming.
• Section 196A: TDS for Non-Residents in Mutual Funds: From April 1st, 2023, non-residents earning from mutual funds in India can furnish a Tax Residency Certificate. This enables them to benefit from TDS as per the tax treaty rate, deviating from the standard 20%.
• Section 192A: Reduced TDS Rate on PF Withdrawal: TDS rate on Provident Fund (PF) withdrawal is now 20%, down from the maximum marginal rate. This is applicable for employees without a PAN.
• Section 193: TDS on Listed Debenture Interest:  No exemption from TDS on interest from listed debentures. Late payment of interest on tds is mandatory on interest earned from such specified securities.
• Section 194N: Increased TDS Threshold for Co-operative Societies: Starting April 1st, 2024, co-operative societies will have a higher TDS threshold for cash withdrawals. Tax will be deducted if the withdrawal amount by co-operative societies exceeds Rs 3 crore, compared to the previous limit of Rs 1 crore.

Hence, interest and penalty on late payment of tds differs in each situation.

Timeline Of Tax Deduction At Source Under Section 194-IA And 194-IB

When tax is deducted at source under Sections 194-IA and 194-IB, there will be interest on late payment of tds. The deductor must provide a challan-cum-statement using Form 26QB and Form 26QC, respectively (how to pay interest on late payment of tds 26qb). This statement should be submitted within 30 days from the end of the month in which TDS is deducted. It's crucial to emphasize that, as an exception, a separate return is not required in these cases.

Interest And Penalty On Late Payment Of Tds

According to Section 201(1A), if TDS (Tax Deducted at Source) is not deposited on time after deduction, interest is levied at a rate of 1.5% per month. The interest on late payment of tds section is calculated from the date of TDS deduction to the actual deposit date, considering each month as a whole (30-day period), not based on the number of days.

For example, if TDS of Rs. 5,000 is deducted on January 13, 2024, and payment is made on May 17, 2024, the interest will be computed from January 13, 2024. The interest amount will be Rs. 5,000 x 1.5% p.m. x 5 months (Jan-May) = Rs. 375.

It is important to note that interest is calculated from the date of TDS deduction (for that you should know how to calculate interest on late payment of tds), not the due date. For instance, if tax is deposited one month after the due date, assuming TDS deduction on February 21, 2024, with a due date of March 7, 2024, and actual deposit on March 8, 2024 (one day after the due date), interest is applicable from February 21, 2024, to March 8, 2024, i.e., for 2 months. The interest to be paid is 1.5% p.m. x 2 months = 3% on the TDS amount.

Note- Interest on late payment of tds disallowed under which section

Difference Between TDS Deduction And TDS Deduction But Not Paid

If TDS is not deducted, then an interest of 1% per month or part thereof is applicable. This interest is applied from the date on which TDS should have been deducted or collected to the actual date on which TDS or TCS is deducted or collected. On the other hand, if TDS is deducted but remains unpaid, then an interest of 1.5% per month or part thereof is charged. This interest is applicable from the date on which TDS is collected to the date on which such TDS or TCS is paid.