TDS

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 February 2011 How much interest is levied in case of delayed payment of TDS ,
Its 1.5% p.m. Besides this if any other interest?
What is the penalty in case of non filing/delay in TDS returns>>

Ram Avtar Singh

Ram Avtar Singh (Expert)
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27 February 2011
Under the existing provisions of section 201(1A) of the Act, a person is liable to pay simple interest at one per cent for every month or part of month in case of failure to deduct tax or payment of tax after deduction.
With a view to discourage the practice of delaying the deposit of tax after deduction, it is proposed to increase the rate of interest for non-payment of tax after deduction from the present one per cent to one and one-half per cent for every month or part of month.
This amendment is effected from 1st July, 2010.

Querist : Anonymous

Querist : Anonymous (Querist)

28 February 2011 Besides this if any interest/penalty is levied???

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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27 July 2025 Sure! Here's a detailed answer to your question on interest and penalty for delayed TDS payment and non-filing of TDS returns:

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### Interest on Delayed Payment of TDS

* As per **Section 201(1A)** of the Income Tax Act:

* If **TDS is not deducted**, or
* If **TDS is deducted but not deposited to the government on time**,
then **interest is payable**.

* **Interest rate for delayed payment of TDS**:

* **1.5% per month or part of the month** (from 1st July 2010 onwards) on the amount of TDS.

* The interest is **calculated from the date TDS was deductible or collectible till the date it is actually paid**.

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### Additional Interest on Non-Deduction of TDS

* If TDS is **not deducted at all**, an **additional interest of 1% per month** is charged on the amount from the date tax was deductible till the date of deduction.
* So, in case of **non-deduction and late payment after deduction**, **total interest can be up to 2.5% per month** (1% for non-deduction + 1.5% for delayed payment).

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### Penalty for Delay or Non-Filing of TDS Return

* **Penalty under Section 271H** applies for:

* Delay in filing TDS returns.
* Non-filing of TDS returns.

* Penalty amount:

* **₹10,000 per day** of delay.
* Maximum penalty can extend up to the amount of TDS deductible.

* Besides penalty, prosecution can also be initiated under some circumstances for willful default.

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### Summary:

| Issue | Interest / Penalty |
| -------------------------------- | --------------------------------------- |
| Delay in depositing deducted TDS | 1.5% per month on TDS amount |
| Non-deduction of TDS | Additional 1% per month until deduction |
| Delay in filing TDS return | ₹10,000 per day till return is filed |
| Non-filing of TDS return | Same as above + possible prosecution |

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If you want, I can also help you draft a formal explanation or guide on how to calculate interest and file returns. Need that?

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