INTEREST is required to be paid under various sections of the Income tax Act, 1961, if there is any delay in deposit of taxes or there are certain types of non-compliance.

Generally, interest is levied at the rate of one per cent per month under the act. You can avoid any unnecessary interest payment by planning your tax payments during the year.

Correct TDS on salary: If you are a salaried taxpayer you would have declared your proposed tax investments to your employer. The employer will consider this at the beginning of the year and calculate the taxes. In case investments are not declared, the employer will deduct a higher amount on a monthly basis, which could result in a tax re fund. It is wise to provide the declarations at the beginning of the year so that correct amount of tax is deducted throughout the year. Also, if you make investments earlier, you receive interest for a greater part of the year. This is typically the case with investment in PPF, bank deposits and NSC.

TDS on other income: We may be in receipt of interest income, commission and rent in addition to salary. Typically, the payers of such income are required to deduct tax before making the payment.

This is provided in the act, to avoid any unnecessary hassle to the tax payers in claiming a re fund later. You can submit Form 15G or Form 15H (for senior citizens) if you have income from interest on securities/bank deposits or in come from units. Based on the declaration, there will be no deduction of taxes. You can also try to obtain a `Nil' withholding certificate from the In come-tax department.