Tds on salary
This query is : Resolved
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 ?
What if same is happened in case perqisite is given to employee & tax not deducted & paid ?
08 September 2011
TDS is deducted on receipt basis so need to deduct TDS when Payment is made.
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**.
---
### 📌 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**.
---
### 📌 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.
---
### 📋 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.
---
### ✅ 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 |
---
Would you like a working interest calculation template or draft justification for a tax audit reply?
---
### 📌 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**.
---
### 📌 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.
---
### 📋 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.
---
### ✅ 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 |
---
Would you like a working interest calculation template or draft justification for a tax audit reply?
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