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Discussion > Income Tax >

INTEREST ON TDS allowability as expense

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[ Scorecard : 31]
Posted On 14 September 2009 at 19:36 Report Abuse

Sir, can u pls guide me on the issue of Allowance of Expense Towards Payment of Interst on TDS.

1) is it an allowable expense under the Act.

2) if so, please let me know the section No. and Notifications by CBDT if any.

Thank you for helping me.

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CA. Megha Topiwala

[ Scorecard : 1534]
Posted On 14 September 2009 at 19:48

Interest towards the late payment of TDS is not allwoed as expense....

Ankit Gupta
Asst Manager

[ Scorecard : 22]
Posted On 14 September 2009 at 21:10

Interest on TDS is not a allowable enpenditure.

Infact any type of interest piad under Income tax Act 1961 is not allowable.

Refer Sec 40(a) or 37


[ Scorecard : 2390]
Posted On 14 September 2009 at 21:30

Interest on TDS is treated as penal in nature. U cant claim the same



[ Scorecard : 288]
Posted On 14 September 2009 at 21:55

 Do you mean late filing penalty on TDS??

Dude, As far as I know, all types of penalties, interest for late payments were not allowed as an expense.

Simple rule is that "all expenses incurred for the business/profession" can be shown as deduction

extra expenses incurred for business/prof. due to the mnanagement delay that is not allowed as an expense..

For ex:  Insurance policy remium - Rs.1000  late payment fee Rs.150.

Total premium paid is Rs.1150

While computation of Income of individual/Buss./Prof.  only Rs1000 can be shown as a deduction but not Rs.1150

Warm Regards


Member (Account Deleted)

[ Scorecard : 1738]
Posted On 15 September 2009 at 08:30


Late CA Sampat Jain
Chartered Accountant

[ Scorecard : 4737]
Posted On 15 September 2009 at 11:29

 Payment of income-tax is not deductible as per section 40(a)(ii); hence, interest under sections 139, 215 and 217 which is to be regarded as accretion to tax, cannot also be allowed to be deducted - Assam Forest Products (P.) Ltd. v. CIT [1989] 180 ITR 478 (Gauhati).

Note : On the same principle, interest payable under sections 220(2), 234A, 234B or 234C is also not deductible

section 40(a)(ii) disallows only tax on profits and gains of business

CA Sumit Arora

[ Scorecard : 1400]
Posted On 15 September 2009 at 16:44

 Interest on TDS will not be allowed as expense. 

CA.Parsun Garg

[ Scorecard : 1365]
Posted On 15 September 2009 at 17:30


Interest on TDS is in the nature of Penal Interest, so it will not be allowable as business expenditure.

Mayank kharbanda
Risk Advisory Services

[ Scorecard : 404]
Posted On 15 September 2009 at 23:39

@ Ram da one & Ankit Gupta.......


All interest which are penal in nature are not disallowed under income tax act....

interest on service tax, sales tax are allowed expenditure under income tax act....

@ Ram da one......

da example which u have given is not correct.....aise toh sir aap interest on bank loan bhi disallowed kar denge.......

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