Tds on salary

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Vipul (Querist)
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06 September 2011 If TDS is not done on Salary on monthly basis & at the end of the Year entire amount of tax is deducted & paid then Interest will be attracted ?

What if same is happened in case perqisite is given to employee & tax not deducted & paid ?

CS Bijoy

CS Bijoy (Expert)
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08 September 2011 TDS is deducted on receipt basis so need to deduct TDS when Payment is made.

Vipul

Vipul (Querist)
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08 September 2011 Mr Bijoy,
I didn't get you.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Yes, **interest will be attracted** if TDS on salary (including perquisites) is **not deducted monthly** and is instead deducted and paid **at the end of the financial year**.

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### 📌 Legal Position Under Income Tax Act:

#### 🔸 **Section 192** – TDS on Salary:

* TDS is required to be **deducted at the time of payment** of salary (i.e., when salary is actually paid, monthly).
* Deducting the entire TDS at the **end of the year** is **not compliant** unless the employee is **paid only once**.

#### 🔸 **Section 201(1A)** – Interest for Late Deduction or Payment:

1. **If TDS is not deducted** on time:

* Interest @ **1% per month or part thereof** from the **date tax was deductible** to the **actual date of deduction**.
2. **If TDS is deducted but not paid** on time:

* Interest @ **1.5% per month or part thereof** from the **date of deduction** to the **actual date of payment**.

✅ **So in your case**, if TDS was supposed to be deducted monthly (but wasn’t), interest @ **1% per month** will apply **for each month of delay**.

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### 📌 Treatment of Perquisites:

* Perquisites are **part of salary** under Section 17(2), and **TDS on perquisites** is also required **at the time of providing the benefit or salary payment**, as per valuation rules.
* Same **interest provisions under Section 201(1A)** will apply for delay in deducting tax on perquisites too.

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### 📋 Example:

Assume:

* Salary is ₹50,000/month, total ₹6,00,000 per annum.
* TDS of ₹60,000 is to be deducted in total (₹5,000 per month).
* No deduction was done until March, when full ₹60,000 was deducted and paid.

Then:

* Interest @1% per month will apply on:

* ₹5,000 for April (11 months delay),
* ₹5,000 for May (10 months),
* and so on...

This could total up to ₹30,000+ interest, depending on dates.

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### ✅ Summary:

| Issue | Interest Applicable? | Rate |
| ------------------------------- | -------------------- | ----------------------------- |
| TDS not deducted monthly | ✅ Yes | 1% per month (u/s 201(1A)) |
| TDS deducted late but paid late | ✅ Yes | 1.5% per month (u/s 201(1A)) |
| TDS not deducted on perquisites | ✅ Yes | 1% or 1.5% depending on delay |

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