TDS Default Notices : How to avoid Interest Defaults
Each e-TDS statement is processed by TIN and defaults are put on web site for deductors to rectify.
In this article, we will examine what is default on account of interest and how it can be avoided
When is interest payable ?
As per income-tax , interest is payable under the following two circumstances
- Tax is not deducted , when it was deductible
- Tax once deducted, is not paid on or before due date
When tax is to be deducted
| At the time of credit or payment, whichever is earlier |
| 193- Interest on securities |
| 194A- Interest Other than “Interest on securities” |
| 194C- Payment to contractors / sub contractors |
| 194D – Insurance commission |
| 194H – Commission or Brokerage |
| 194G- Commission on sale of lottery tickets |
| 194I- Rent |
| 194J- Professional or technical fees |
| Before making payment or distribution |
| 194- Dividend |
| At the time of payment |
| 192- Salaries |
| 194B- Winning from lotteries / crossword puzzles |
| 194BB Winnings from horse races |
| 194EE – Payment from National Saving Scheme |
| 194F Payment for repurchase of units by UTI / mutual funds |
| 194LA: Payment of compensation on acquisition of certain immovable property |
What is the Due date of deposit of TDS ?
- All the TDS deductions made during a month are to be paid on or before7th of the next month. Example : All deductions made during April ,must be paid on or before May 7th, 2010.In case 7th of the month happens to be a Sunday or a bank holiday, then the payment can be made on the next business day.
- Beginning FY 2010-11 ,for deductions made during the month of March, payment must be made on or before 30th April.
What is the rate of interest ?
W.e.f 01-07-2010
- From the date when TDS was deductible till date of actual deduction,rate of interest is 1% p.m.
- For delayed deposit, from date of deduction till actual date of payment, rate of interest is 1.5% p.m
Prior to 01-07-2010
- From FY 2006-07 onwards for delayed deposit, from date of deduction till actual date of payment, rate of interest is 1.0% p.m
What is the due date of payment of interest ?
Interest must be calculated and paid before filing of eTDS statement of the quarter.
| Quarter 1 | Jul-15 |
| Quarter 2 | Oct-15 |
| Quarter 3 | Jan-15 |
| Quarter 4 | May-15 |
How is interest to be calculated ?
- Interest is to be calculated for every month or part of a month comprised
in a period, any fraction of a month shall be deemed to be a full month - The amount of tax, penalty or other sum in respect of which such interest
is to be calculated shall be rounded off to the nearest multiple of one
hundred rupees and for this purpose any fraction of one hundred rupees
shall be ignored and the amount so rounded off shall be deemed to be the
amount in respect of which the interest is to be calculated.
Of course, those using TdsPac software from Fast Facts need not worry. Automatic and accurate calculation of interest is available in single click.
Example of Interest Calculation
| Date Of Payment | Date of Deduction | Due Date | Date of Deposit | Delayed Deposit | Delayed Deduction | ||
| Months | Rate | Months | Rate | ||||
| 05/04/2010 | 05/04/2010 | 07/05/2010 | 09/05/2010 | 2 | 1% | - | - |
| 10/04/2010 | 10/04/2010 | 07/05/2010 | 09/05/2010 | 1 | 1% | - | - |
| 02/07/2010 | 04/08/2010 | 07/09/2010 | 07/09/2010 | - | - | 2 | 1% |
| 02/07/2010 | 04/08/2010 | 07/09/2010 | 15/09/2010 | 2 | 1.50% | 2 | 1% |
Avoiding Interest Default
To avoid interest default
- Deduct tax at source in time
- Deposit TDS by due date
- In case of delayed deduction / deposit ,calculate interest and deposit the same
- Show such interest properly in eTDS statement
Rectifying Interest Default
- You may download default notices after logging into your TAN account.
- Default Notice is a plain excel sheet without any password protection
- If there is any default on account of non-payment or short payment of interest, you need to pay up the same
- After paying , you have to file correction statement by including the interest payment challan.
While calculating TDS amount for commission agent, Rs.50 has been calculated less but it is shown as already dedcuted in e-tds return.How can it be rectified???/
Sandhya
May 3, 2013 at 10:52 PM
Sandhyaji,
If the challan amount is less by Rs. 50/- than required, you will have to deposit Rs. 50/- with interest by Challan. Then make Correction Statement after importing the Conso file. You will have to adjust the amount paid to match with the TDS deposited under the earlier Challan and the additional Challan.
N. Gopala
May 15, 2013 at 9:29 AM
SIR i have a doubt what if i accrue expense in april-12 and book the expense in march-12. in this case when will i be liable to remit tds to IT. (u/s 194i)
Gaurav Lohia
March 27, 2013 at 4:56 PM
How to generate a default statement for pertaining to some quarter in NSDL website
saikrishna
February 26, 2013 at 2:03 PM
[...] TDS Default Notices : How to avoid Interest Defaults 47 comments August 2011 [...]
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December 31, 2012 at 12:10 PM
My query is, We have corrected our TDS return by paying amount due to invalid pan.
we have added a new challan and adjust further 10% amount due to invalid pan. but the same default is generate again with double no. of deductees.
what to do..???
Kindly guide me..
Subham
November 16, 2012 at 6:48 PM
We had paid tds payment of Sep-2012 in 8th October,2012 as there is Sunday on 7th Oct, 2012 . So we can liable to pay interest or it is proper method to pay tax on next day as there is Sunday on 7th of the next month.
Abhignya Shah
October 11, 2012 at 1:38 PM
sir, my TDS challan no show default but TDS challan is upload plz give me solution then default challan to correct challan. plz
mitul
August 22, 2012 at 1:29 PM
sir,
i have a doubt regarding allowbility of expenses against which tds collected before filling of return but deposited after the filling date. For example :- If Mr. Ram made TDS while paying rent, towards using of machine, to the machine owner in Financial Year 2009-10, but not deposited within the due date, ie., within the return filling date, then the expenses become dis allowable in that year. But if Mr. Ram deposited the same TDS amount in the subsequent year, can he avail the exepnses, for which TDS deposited, as allowable expenses in that year in which he deposited the TDS amount.
Sumit
August 15, 2012 at 11:28 PM
Wat was the due date for Quarter4 TDS fro financial year 2009-2010..??
Anuj K
August 9, 2012 at 12:10 PM
If the TDS payment is after 12 months. is there is any compound fee is applicable
srinivasa rao c
August 1, 2012 at 11:42 AM
dear Sir,
we have a default for Q1 Q2 Q3 & Q4 2009-2010 2011-12. as some cases PAN no. is no valid, We have revised TDS return filed the fvu file at TIN center. but in our TAN account still the default is there. Is there any duration for them to remove the default? or any other things need to be done??
We will be happy if you would give a good suggestion
Thanking You
Regards
Unicon Fibro Chemicals Pvt Ltd
Mumbai
Pradeep Tawade
July 27, 2012 at 1:15 PM
after successful e-filing of correction statement, the copies of default ststus statements, copies of provisional receipt /token no. of original and revised returns, copies of short deducted and interest payments challans if any along with reply to the Default notice should be sent to IT dept. from whoom the default notice is received. Generally after 2 working days after the e-filing we are able to take the From 16A for the invalid PAN Nos. and short deducted PAN Nos.
K Somasekhar,Management Trainee,
Bharat Dynamics limited
For any corrections please feedback me at e-mail. somasekhar.cwa@gmail.com
K Somasekhar
July 31, 2012 at 9:25 AM
Mr. Somasekharji,
I beleive that sending the documents to IT Department is not required after filing the Correction Staement. For the first Correction Staement of our Company, I had approached the IT Officer with the documents but he was not willing to receive the documents since the Default Statement was received from NSDL. He said that we may submit the documents to them if we receive a Notice from the IT Department.As you have stated, we can download Form 16A, within 2-3 days of filing the Correction Statement. But, IT Dept. takes quite some time to update the Default Statement after filing the Correction Statement. I have observed that in some cases although the interest on delayed payment and delayed deductions are updated, the interest on interest is not updated. I had asked an Income Tax Officer at Charni Road, Mumbai about this, but he said that we have to approach NSDL regarding this. It is very difficult to connect to NSDL helpline No. My email was not replied by them. I hope the interest on interest will be updatede in due course.
N. Gopala
August 1, 2012 at 10:56 AM
Mr. N.Gopala,
With ref to your below mail I have approched to NSDL for the same query there reply is as follows,
If you have filed any correction statement which is accepted by TIN & the Defaults details are not updated yet, you are requested to contact the TDS Assessing Officer.
My correction return is accepted but default notice is not clearted from web last 6 months.
yogesh bhide
August 14, 2012 at 1:09 PM
my net annual salary income is Rs.2,04,586/-, My tax is Rs.2,533/-. My employer not deducted TDS. How much i want to pay interest and income tax. please guide me.
ARUN KUMAR M
July 23, 2012 at 7:24 PM
Since tax payable is less than Rs. 5,000/-, I beleive, you may pay the tax before 31/07/2012 (before filing IT returns) without any interest.
N. Gopala
July 26, 2012 at 9:21 AM
What i do in the case of default interest paid,
omprakash sharma
July 21, 2012 at 2:34 PM
After paying the default interest you have to file a Correction Statement for the corresponding Quarter.
N. Gopala
July 24, 2012 at 9:56 AM
I have received the default mail and i login to NSDL website it was asked three deductee’s PAN and TDS amount but i deduct the TDS for only one person then how to get the default file and consolidated e-TDS file. Pls clarify
Nantha
May 12, 2012 at 4:36 PM
YOU FILL ONLY THE SAME DEDUCTEE PAN NO. AND AMOUNT 2 TIME ONLY.
PAWAN KUMAR SHARMA
July 16, 2012 at 1:02 PM
SIR,
I HV RECD. DEFAULT FOR LESSER PAYMENT OF INTEREST IN 4TH QUARTER OF AY 2011-12 AND IN 1ST & 2ND QUARTER OF AY 2012-13. ie I HV PAID INTEREST FOR DELAYED PAYMENT WITH WRONG CALCULATION IN THE MONTH. NOW HOW I SHOULD COMMUNICATE THIS TO I.T.DEPT. OR CORRECTION RETURN SHOULD BE FILED FOR THIS INTEREST PAYMENT ALSO.
S. Bhuvaneswari
April 26, 2012 at 11:37 AM
After depositing the due amount as per default statement, Correction Statement has to be filed. It takes some time for the IT Department to take the Correction Statement into their records.
N. Gopala
April 26, 2012 at 3:14 PM
how to file correction return if only interest amount paid through challan
subramanyem
January 11, 2013 at 4:17 PM
Dear Subramanyemji,
You have to download the Consolidated file from TRACES (earlier it was from NSDL) site and do the correction by adding the challan under which you have paid the interest. If the interest is due to delay in payment of TDS, you do not have to do any correction in the deductee sheet. if the interest arises out of short deduction, you have to do correction in deductee sheet also. After validating through software, you can submit the fvu file at NSDL facilitation center.
N. Gopala
January 14, 2013 at 5:49 PM
Similar query raised by Panda regarding section code, after TDS deducted interest paid through challan from TDS amount of Interest payable due to late depost of tax deducted. Please prescribe the section code under which the payment to be deposited in bank.
e.g.
TDS amount of Interest payable due to late depost of tax deducted Rs.100
Less :deducted interest paid through challan Rs. 70
————
Rs.30
in this case, for Rs.30/- which section code will come?
Sanchita
February 27, 2012 at 1:12 PM
The Section code would be the same section under which the less deduction has occured. The default staement gives the deducteewise break up of interest due and also the section code. The interest has to be deposited under the code in which the Rs. 30/- has been deducted less.
N. Gopala
March 5, 2012 at 9:28 AM
dear Sir,
we have a default for Q3, 2011-12 generated on 24.01.2012. we paid the interest mentioned in the default on 14.02.2012 and filed the fvu file with correction on the same day.
but in our TAN account still the default is there. Is there any duration for them to remove the default? or any other things need to be done??
We will be happy if you would give a good suggestion
Thanking You
Regards
Bharathi Nursing Home
Bangalore
Bharathi Nursing Home
February 17, 2012 at 9:10 PM
sir
I have deposited a challan of Rs. 10000/- but wrongly it shown in TDS return as two seperate challan with same particulars i.e. BSR code, Challan serial no. & date. Now we are received mismatched notice from the department. In NSDL site Quarterly statement status also shown its ‘failed to match’. Now I how to file correction statement.
Mangat
February 16, 2012 at 2:24 PM
The PAN of proprietory firm and that of the Proprietor is same and if the PAN of the Proprietor is quoted in the TDS returns, there is no case for deducting 20%. However, if the payment is made in the name of the proprietory firm and not to the proprietor by name, I believe, the rate of deduction for individual payee may not be applicable. e.g.: under Section 194C, the rate applivable for contractor or sub-contractor would be 1% for individual but 2% for the proprietory firm.
The interest will be calculated from the date of deduction upto date of deposit if the deducted amount is not deposited within the due date and further interest on the interest due will be payable upto date of processing if there is default in payment of interest.
N. Gopala
N. Gopala
January 31, 2012 at 10:24 AM
As per which section interest on interest upto date of processing is charged?
Preeti Gupta
February 22, 2012 at 6:32 PM
If TDS of proprietory firm is deducted at 1% and in TDS return also name of proprietory firm is written instead of Individual name.TDS defaults are showing TDS should be deducted at higher rate ie 20%. What is the procedure to rectify the same?.
The department have charged Interest “from date of deposit till date of processing”. However according to the rules the deposit date is to be taken for the date of the credit to the Government. Now whether the date of deposit or the date of processing to be considered?
Mittal
January 27, 2012 at 4:59 PM
i have same case…..can we remove flag H …..and how….if you find solouation please forward me on
rajesh
May 4, 2013 at 3:12 PM
I have download Default file for 4th Quater 2009-10 from nsdl site, in that i found interest is calculated on tds amount deposited in bank on 21.05.2010, which is deducted on 31.03.2010. As per rules tds deducted on 31.03.2010 is to be paid on or before 31.05.2010. what should I do?
Monali Nikam
November 8, 2011 at 3:17 PM
Please verify if this transaction is marked as credited entry.
fastfactsindia
November 10, 2011 at 6:13 PM
Simmilar to query raised by Monali Nikam, In our case entry is marked as credit entry denoted as “C” in column “Book Cash flag*” in default file. Still we have been charged interest for delay in depositing TDS. What is the procedure for further…
rahul Mohile
January 21, 2012 at 12:18 PM
Monali ji, In such case revise your TDS return in following manner:
1. take consolidated file of relevant quarter from NSDL
2. import the same in RPU 2.8 presently recognized NSDL software
3. do not correct anything in challan details tab
4. corrcet the entry in default i.e. made on 31/03/2010
5. In the very last column of this annexure ‘whether TDS is paide by book entry’ ? make it ‘Yes’ and rectify the same return your problem will be solved after revised filing of TDS return
jalpeshjmr
June 11, 2012 at 7:01 PM
Revise your return
In consolidated file, go to 31.03.2010 entry and in the very last column of the annexure tab of deductee detail ‘tds is deposited by book entry?’ give ans as ‘Yes’ and revise the same return, default will get solved for sure
jalpeshjm
June 11, 2012 at 7:04 PM
Sir
What is the procudure of forgatten USER ID & PASSWORD,
i registred tan by nsdl february 2011 but not received any mail throuw user id & password , i contact with nsdl but not ans properly reply nsdl ( just time updation in tan registration detail in site) so i request to nsdl kindly sent the letter formet but till date not recieved any formet
AMEET KUMAR
September 22, 2011 at 2:05 PM
I believe you can re-register for TAN Account
N. Gopala
January 31, 2012 at 10:29 AM
NSDL SENDED YOU MAIL. PLEASE CHECK ON YOUR MAIL IN TO SPAM BOX.
PRAVEEN KUMAR JAIN (MBA)
March 19, 2012 at 7:46 PM
I believe that you can now re-registert your TAN No. at NSDL website and note down the TAN Registration No.and pass word. The password is required to be changed periodically.
N. Gopala
March 21, 2012 at 10:03 AM
there is nothing big in it u can make as many as user of TAN with different names and same data will be replicated, so in my opinion re make the account and proceed further Ameetji
jalpeshjm
June 11, 2012 at 7:06 PM
Sir,
I want to know if my Bill amount is 100000 and Bill date is 1/9/2011. I have deducted tds @ 10 % on Prof. Fees on 1/9/2011 and paid to income tax on 3/9/2011. I have paid payment to the party on 30/9/2011. It will come under defaulter please let me know.
Best Regards,
Rohini.
Rohini H, Naik
September 21, 2011 at 10:10 AM
the due date for payment of tds deductions made between 1/9 to 30/9 will be 7/10, so you are not a defaulter
SYSTECH Softwares - Vivek Shah
October 11, 2011 at 10:42 PM
Sir,
What is the time limit for payment of interest and also to file correction statements? When is the interest on interest wil be applicable and at what rate? Kindly clarify.
N. Gopala
September 5, 2011 at 1:22 PM
how to revise return with default interest paid?
paritosh
September 2, 2011 at 7:37 PM
Sir,
Under the head ‘What is the rate of interest?” you have said that The rate of interest prior to
1.7.2010 for delayed deposit is 1.5% p.m. and that the rate of interest is 1% p.m.from F.Y. 2006-07 onwards. What is the rate of interest applicable for delayed deposit for the period 1.4.2007 to 30.6.2010? Kindly clarify.
In the table under “Example of Interest Caculation” following may please be clarified:
In the first example, the delay in deposit is from 7.5.2010 t0 9.5.2010 which is less than one month. Why you have shown the delay as 2 months? For the same delay, in the second example you have shown 1 month delay. In the fourth example again you have shown a delay of 2 months whereas the actual dely in deposit is only 8 days.
Best regards,
N. Gopala
N. Gopala
September 1, 2011 at 4:38 PM
Rate of Interest
Prior to 01-07-2010 , there was only one rate of interest payable @ 1% p.m. from the date tax was deductible till it was actually deposited
After 01-07-2010, there are two rates of interest
1% p.m. from the date it was deductible till it was actually deducted
1.5% p.m. from the date it was deducted till it was deposited
Example table clarification
First row : Delay has to be calculated from date of deduction i.e 05-04-2010 and not from due date which you have mentioned
Second row : Delay from 10-04-2010 to 09-05-2010 is one month only
Fourth row: Yes this is very interesting. You may feel that actual delay in deposit is only 8 days , still it entails delay of 2 + 2 months. First delay of 2 months is because it was not deducted on date of payment/credit i.e. 02-07-2010. Hence from 02-07-2010 to 04-08-2010 , delay is 2 months ( part of month rounded off to one)
Similarly delay in deposit from 04-08-2010 to 15-09-2010 is 2 months.
fastfactsindia
September 3, 2011 at 11:57 AM
Mr. N. gopala,
There is clear mentioned that the delay in deposit calculated from the date of deduction and not from the date of deposit…so its calculated from the date of deduction i.e. 05.04.2010..
its calculated like this…(05.04.2010 to 04.05.2010 1 month) and (05.05.2010 to 09.05.2010 1 month) ( Note.part of the month rounded off to 1)
second n forth eg also related to this explanation…
Pranit M. Gawli
October 31, 2011 at 12:25 PM
What is the section code to be applied for deposit of interest due to late deduction or late deposit at the time of Correction, till now there is no section code available in any software. Please prescribe the secction code under which the payment to be deposited in bank.
lnpanda
September 1, 2011 at 7:29 AM
For each section , you have to calculate interest separately and while depositing interest, and make separate e-payment for each section.
fastfactsindia
September 3, 2011 at 11:58 AM
Yes, TDS interest is to be paid by TDS section category but at the time of filling challan no. 281 select ‘raised by IT department in Regular Assessement’ (400)
jalpeshjm
June 11, 2012 at 7:11 PM
BUT UNDER WHICH CODE 94A (SOLUTION GIVEN BY ITO HELP LINE), OR TO THE RELEVANT CODE ( 194J, 194C, ETC.) FOR WHICH DEMAND OF INTEREST IS RAISED BY I. T. DEPTT.
SAJAN KESHRI
December 8, 2012 at 12:53 PM
The interest is to be paid under sections 94C, 94J etc under which the interest became due.
N. Gopal
N. Gopala
December 11, 2012 at 10:34 AM