Tds

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 December 2014 Just for 1 day delay in depositing of deducted tds, why 2 months interest is levied by tdscpc @ 1.5% per month.Please guide me in this regard.

Rupesh Jain

Rupesh Jain (Expert)
Follow

26 December 2014 due to as per law intt will applicable fro the date of deduction not the due date of tax deposit.

Message likes : 1 times

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

26 December 2014 If TDS is made in the previous month that month also to be calculated for delay. If TDS is made on 5th of this month and for remittance made on 8th one month interest is payable.

Querist : Anonymous

Querist : Anonymous (Querist)

26 December 2014 IF TDS IS DEDUCTED ON 24TH APRIL 2014,BUT SUCH TDS IS DEPOSITED ON 08TH MAY 2014, SO INSTEAD OF 1 MONTH INTT WHY 2 MONTH INTT IS LEVIED.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

27 July 2025 This is a very common and often frustrating issue — let’s break it down with clarity:

---

### 📌 **Why does TDSCPC levy 2 months interest for just 1 day delay in TDS deposit?**

The reason lies in how **Section 201(1A)** of the **Income Tax Act, 1961** defines the calculation of interest for late payment of TDS.

---

### 💡 **Interest on late deposit of TDS** under **Section 201(1A)**:

* **Rate**: **1.5% per month** or part of the month
* **Period**: From the **date of deduction** to the **date of deposit**

---

### ⚠️ **Important Rule**:

The law considers **any part of a month as a full month**.

---

### ✅ **Example to clarify:**

Let’s say:

* **TDS deducted**: 30th November
* **Due date for deposit**: 7th December
* **Actual deposit**: 8th December (1 day late)

Now calculate interest:

| Month | Interest @1.5% for TDS of ₹10,000 |
| --------- | ------------------------------------- |
| November | 1.5% (for 30 Nov to 30 Nov = 1 day) |
| December | 1.5% (1st to 8th Dec = part of month) |
| **Total** | **3% (i.e., 2 months)** = ₹300 |

Even though you're late by **only 1 day**, the law treats both **November** and **December** as full months.

---

### 📌 **Conclusion:**

Yes, it's **legally correct** (though harsh) — **interest is charged for 2 months** even if you are **just 1 day late**, because the period spans **two calendar months**.

---

### ✅ **Tip to Avoid This:**

* Always deposit TDS well **before** the 7th to avoid spillover into the next calendar month.

Let me know if you'd like a template to calculate interest on delayed TDS for future reference.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now