About the TDS Interest Calculator

Tax Deducted at Source (TDS) is a mechanism under the Indian Income Tax Act where the person responsible for making specified payments (like salary, commission, rent, etc.) is liable to deduct a certain percentage of tax before making the full payment to the receiver. This deducted tax must be deposited with the government within a stipulated time. Failure to deduct TDS or deposit it on time attracts a penal interest. This calculator helps you compute this interest penalty accurately as per the law.

How is TDS Interest Calculated?

The interest on late TDS is calculated on a monthly basis, not on the number of days. The law states that even a delay of one day in a month is treated as a full month's delay. The interest rates are defined under Section 201(1A) of the Income Tax Act:

• For late deduction of TDS: Interest is charged at **1% per month** (or part of a month) from the date the tax was deductible to the date it was actually deducted.
• For late payment of TDS (after deduction): Interest is charged at **1.5% per month** (or part of a month) from the date of deduction to the date of actual payment to the government.

This calculator automatically determines the number of months of delay for both scenarios and applies the correct interest rates.

Frequently Asked Questions (FAQ)

What is Tax Deducted at Source (TDS)?

TDS is a system of advance tax collection where the tax is deducted at the very source of income. It ensures a regular flow of revenue for the government and eases the tax payment burden on the receiver of the income at the end of the financial year.

What is the due date for depositing TDS?

For all deductions made (except for the month of March), the due date for depositing the TDS with the government is the **7th of the following month**. For TDS deducted in the month of March, the due date is the 30th of April.

Is there a penalty for late filing of TDS returns?

Yes, apart from the interest on late payment, there is a penalty for the late filing of TDS returns (e.g., Form 24Q, 26Q). A late filing fee of ₹200 per day is levied under Section 234E until the fee amount equals the TDS amount. Additionally, a penalty under Section 271H may also be imposed.

Can the interest on late TDS be waived?

The interest charged under Section 201(1A) for late deduction or payment of TDS is mandatory and cannot be waived. It is a statutory liability and must be paid by the deductor.