TDS Interest Calculator (India)
Enter the TDS amount and the relevant dates to find the exact interest or fee payable under the Income Tax Act 1961. Choose from three modes: interest on late deduction of TDS (Section 201(1A) at 1 percent per month), interest on late payment after deduction (Section 201(1A) at 1.5 percent per month), or the late-filing fee for a quarterly TDS return (Section 234E at Rs.200 per day, capped at the TDS amount). Partial months always count as full months for interest. Results update instantly as you type.
What is TDS and why is interest charged?
Tax Deducted at Source (TDS) is a mechanism under the Indian Income Tax Act 1961 by which a payer (the deductor) deducts a percentage of tax from certain payments - salaries, professional fees, rent, interest, contractor payments, and more - before crediting the amount to the payee. The deducted tax is then deposited with the government within prescribed deadlines. When a deductor fails to deduct TDS on time, deducts it but does not deposit it by the due date, or files the quarterly TDS return late, the Income Tax Act imposes mandatory interest and fees. These charges exist to compensate the government for the time-value loss of delayed tax receipts and to incentivize timely compliance.
Section 201(1A): interest for late deduction and late payment
Section 201(1A) of the Income Tax Act 1961 prescribes two distinct interest rates. First, if TDS is not deducted within the required time, interest accrues at 1 percent per month (or part of a month) from the date the TDS became deductible to the date of actual deduction. Second, once TDS has been deducted, if it is not deposited to the government by the 7th of the following month (or 30 April for March deductions), interest accrues at 1.5 percent per month from the date of deduction to the date of actual deposit. Crucially, any part of a month - even a single day - counts as a full month for the purpose of computing interest. This "months rounded up" rule means that depositing TDS even one day late into the next calendar month triggers an additional full month of interest.
Section 234E: late-filing fee for quarterly TDS returns
Every deductor must file a quarterly TDS statement (Form 24Q for salary payments, Form 26Q for others) within the due dates: 31 July for Q1, 31 October for Q2, 31 January for Q3, and 31 May for Q4. Under Section 234E, a mandatory fee of Rs.200 per day applies for each day the return is filed after the due date. Unlike the interest under Section 201(1A), this fee is capped - it cannot exceed the total TDS amount deducted for that quarter. The Section 234E fee is in addition to any interest under Section 201(1A); both can apply simultaneously if TDS was also paid late.
Other consequences: Section 271C penalty and Section 276B prosecution
Beyond interest and late-filing fees, serious defaults attract additional consequences. Under Section 271C, the Assessing Officer may levy a penalty equal to the amount of TDS not deducted or not deposited. This penalty is entirely at the discretion of the AO and can be challenged on reasonable cause grounds. Under Section 276B, willful failure to deposit TDS collected from a payee is a criminal offence that can lead to rigorous imprisonment from three months to seven years, plus a fine. Additionally, Section 40(a)(ia) disallows 30 percent of expenditure as a business deduction if TDS was not deducted on it, increasing taxable income even if the underlying expense was genuine.
TDS interest rates and penalties at a glance
| Section | Trigger | Rate / Fee | Calculated from | Cap |
|---|---|---|---|---|
| 201(1A) | Late deduction | 1% per month | Date deductible to date deducted | None |
| 201(1A) | Late payment after deduction | 1.5% per month | Date deducted to date deposited | None |
| 234E | Late TDS return filing | Rs.200 per day | Day after due date to filing date | TDS amount for quarter |
| 271C | Non-deduction / non-payment penalty | Equal to TDS amount | Penalty order | TDS amount |
| 276B | Prosecution for willful non-deposit | Rigorous imprisonment 3 months to 7 years + fine | Court order | N/A |
Summary of applicable rates, triggers and caps under the Income Tax Act 1961. Always verify with the latest CBDT circulars.
Frequently asked questions
Is a partial month counted as a full month for TDS interest?
Yes. For both the 1% per month (late deduction) and 1.5% per month (late payment) rates, any fraction of a month counts as a full month. If you deduct TDS on 1 April and deposit it on 2 May, that is treated as two full months (April and May), not one month and one day. This is explicitly stated in Section 201(1A) of the Income Tax Act 1961 and confirmed by the Supreme Court in multiple rulings.
What is the TDS deposit due date for deductions made in March?
For all months except March, the due date for depositing TDS is the 7th of the following month. For deductions made during March, the deadline is extended to 30 April. This extended deadline applies only to non-government deductors. Government deductors must deposit TDS on the same day or by 7th April if using the book-entry method.
Can the Section 234E late-filing fee be waived?
No. The Supreme Court of India held in Rashmikant Kundalia v. Union of India (2015) that Section 234E is a fee, not a penalty, and it is mandatory. It cannot be waived or reduced on grounds of reasonable cause. The only limit is the cap: the fee cannot exceed the TDS amount for that quarter.
Does TDS interest under Section 201(1A) apply to salary payments?
Yes. TDS on salary (Section 192) is subject to the same interest provisions. However, for salary, the deduction is typically spread across the financial year, and employers must ensure that TDS is deposited by the 7th of the following month for each month's deductions. Failure to do so incurs 1.5% per month interest from the date of deduction.
Are there TDS interest implications when PAN is not furnished?
If the payee fails to furnish a PAN, Section 206AA requires TDS to be deducted at the higher of the prescribed rate, 20%, or the rate in force. If the deductor applies the lower prescribed rate instead of 20%, the shortfall is treated as a non-deduction or under-deduction, attracting 1% per month interest on the difference under Section 201(1A).
How is TDS interest shown on Form 26AS or AIS?
Interest paid on delayed TDS deposit is typically reflected in the TDS/TCS credit section of Form 26AS or the Annual Information Statement (AIS) after the deductor files a correction statement. The challan through which the interest is paid (ITNS 281, minor head 400) is also recorded by the TDS CPC. Keeping a copy of the challan is important for future reference or in response to a demand notice.