TDS to be deducted at the time of Journal Entry
Assesse needs to deduct and deposit TDS at the time of passing the journal entry in books or at the time of making the expense payable.
| On Payment Basis | On Payment or credit Basis whichever is earlier | Relevant Section requiring to deduct on credit |
| Salaries (192) | Interest on securities (193) | Explanation at the end. |
| Dividend u/s 2(22)(e) (194) | Interest other than interest on securities (194A) | Explanation to Section 1 |
| Winning from lotteries or crossword puzzles (194B) | Payment to Contactors (194C) | 194C(2) |
| Winning from horse races (194BB) | Insurance commission (194D) | Not Specifically mentioned |
| Payment in respect of NSC 1987 (194EE) | Payment to non Resident sportsperson/sports association (194E) | Not Specifically mentioned |
| Payment for repurchase of MF & UTI units (194F) | Commission on sale of lottery tickets (194G) | Explanation at the end. |
| Compensation/enhanced compensation/consideration/ Enhanced consideration for compulsory acquisition of land or building.(194LA) | Commission or brokerage (194H) | Explanation (iv) at the end. |
| | Rent (194I) | Explanation (ii) at the end. |
| | Fees for professional and technical services.(194J) | Explanation (c) at the end. |
| | Non-resident, not being a company, or to a foreign company | Explanation to Section 1 |
In case any persons ignores the aforesaid provision for deducting TDS at the time of Journal Entry then he would be liable to pay interst u/s 201(1A) as follows:-
(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.”.
Thus for late deduction one has to pay interest u/s 201(1A)(i) and for late payment interest has to be paid u/s 201(1A)(ii).
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