{"id":2539,"date":"2025-07-10T12:27:56","date_gmt":"2025-07-10T06:57:56","guid":{"rendered":"https:\/\/www.caclubindia.com\/guide\/?p=2539"},"modified":"2025-07-10T13:16:52","modified_gmt":"2025-07-10T07:46:52","slug":"interest-on-late-payment-of-tds","status":"publish","type":"post","link":"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/","title":{"rendered":"Interest on Late Payment of TDS: Calculation with Formula"},"content":{"rendered":"\n<p>The Income Tax Department charges interest for delay in depositing TDS (Tax Deducted at Source). This article explains how interest is calculated, with the formula, applicable rates, and consequences of non-compliance.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\r\n<div class=\"ez-toc-title-container\">\r\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\r\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\r\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#Key_Takeaways\" >Key Takeaways<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#TDS_Due_Date_and_Criticality\" >TDS Due Date and Criticality<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#TDS_Due_Dates\" >TDS Due Dates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#Interest_on_Late_Payment_of_TDS_%E2%80%93_When_and_How_Much\" >Interest on Late Payment of TDS \u2013 When and How Much?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#Non-deduction_of_TDS_Failed_to_Deduct_Section_2011Ai\" >Non-deduction of TDS (Failed to Deduct) Section 201(1A)(i)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#Non-payment_of_TDS_Deducted_but_Not_Deposited_Section_2011Aii\" >Non-payment of TDS (Deducted but Not Deposited) Section 201(1A)(ii)<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#Interest_on_Late_Payment_of_TDS_%E2%80%93_Calculation_Formula\" >Interest on Late Payment of TDS \u2013 Calculation Formula<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#Example_TDS_Deducted_but_not_Deposited_15_Interest_per_Month\" >Example: TDS Deducted but not Deposited  (1.5% Interest per Month)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#Example_Non-Deduction_of_TDS_1_Interest_per_Month\" >Example: Non-Deduction of TDS (1% Interest per Month)<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#Penalty_and_Prosecution\" >Penalty and Prosecution<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#In_addition_to_interest\" >In addition to interest:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#Quarterly_TDS_Return_Deadlines\" >Quarterly TDS Return Deadlines<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\r\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Takeaways\"><\/span>Key Takeaways<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Always deduct TDS on time when making eligible payments<\/li>\n\n\n\n<li>Deposit TDS before 7th of next month to avoid interest<\/li>\n\n\n\n<li>Use Form 26Q, 24Q for TDS return filing<\/li>\n\n\n\n<li>Keep track of Challan Identification Numbers (CIN) for audit trail<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TDS_Due_Date_and_Criticality\"><\/span>TDS Due Date and Criticality<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>TDS is the tax deducted at the source of income by the payer before making payment to the payee (employee, vendor, contractor, etc.). As per the Income Tax Act, <strong>TDS deducted must be deposited within the due date<\/strong>, failing which attracts <strong>interest under Section 201(1A)<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TDS_Due_Dates\"><\/span>TDS Due Dates<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Month<\/strong><\/td><td><strong>TDS Deducted<\/strong><\/td><td><strong>Due Date for Payment<\/strong><\/td><\/tr><tr><td>April<\/td><td>Anytime<\/td><td>7th May<\/td><\/tr><tr><td>May<\/td><td>Anytime<\/td><td>7th June<\/td><\/tr><tr><td>June<\/td><td>Anytime<\/td><td>7th July<\/td><\/tr><tr><td>July<\/td><td>Anytime<\/td><td>7th August<\/td><\/tr><tr><td>August<\/td><td>Anytime<\/td><td>7th September<\/td><\/tr><tr><td>September<\/td><td>Anytime<\/td><td>7th October<\/td><\/tr><tr><td>October<\/td><td>Anytime<\/td><td>7th November<\/td><\/tr><tr><td>November<\/td><td>Anytime<\/td><td>7th December<\/td><\/tr><tr><td>December<\/td><td>Anytime<\/td><td>7th January<\/td><\/tr><tr><td>January<\/td><td>Anytime<\/td><td>7th February<\/td><\/tr><tr><td>February<\/td><td>Anytime<\/td><td>7th March<\/td><\/tr><tr><td>March<\/td><td>Anytime<\/td><td>30th April<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Interest_on_Late_Payment_of_TDS_%E2%80%93_When_and_How_Much\"><\/span>Interest on Late Payment of TDS \u2013 When and How Much?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Interest is levied in two cases:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non-deduction_of_TDS_Failed_to_Deduct_Section_2011Ai\"><\/span>Non-deduction of TDS (Failed to Deduct) Section 201(1A)(i)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Interest Rate: <\/strong>1% per month.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Period: <\/strong>From the date it was deductible to the date it was actually deducted.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non-payment_of_TDS_Deducted_but_Not_Deposited_Section_2011Aii\"><\/span>Non-payment of TDS (Deducted but Not Deposited) Section 201(1A)(ii)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Interest Rate: <\/strong>1.5% per month<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Period: <\/strong>From the date of deduction to the date of deposit<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Interest_on_Late_Payment_of_TDS_%E2%80%93_Calculation_Formula\"><\/span>Interest on Late Payment of TDS \u2013 Calculation Formula<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Interest = TDS Amount \u00d7 Rate \u00d7 Number of Months<\/strong><\/p>\n\n\n\n<p>Or<\/p>\n\n\n\n<p><strong>Interest = (Tax Deducted\/Collected x Interest Rate x No. of Months Delayed in Filing) \/ 100<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Example_TDS_Deducted_but_not_Deposited_15_Interest_per_Month\"><\/span>Example: TDS Deducted but not Deposited  (1.5% Interest per Month)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>TDS deducted on: 10th June<\/li>\n\n\n\n<li>Due date: 7th July<\/li>\n\n\n\n<li>Actual payment: 2nd August<\/li>\n\n\n\n<li>Delay = 1 full month (June 10 \u2013 August 02)<\/li>\n<\/ul>\n\n\n\n<p><strong>Interest = \u20b910,000 \u00d7 1.5% \u00d7 2 = \u20b9300<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Example_Non-Deduction_of_TDS_1_Interest_per_Month\"><\/span>Example: Non-Deduction of TDS (1% Interest per Month)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Scenario:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A company pays \u20b91,00,000 as professional fees to a consultant on 10th May 2025.<\/li>\n\n\n\n<li>TDS of 10% (\u20b910,000) was applicable under Section 194J.<\/li>\n\n\n\n<li>The company forgot to deduct the TDS at the time of payment.<\/li>\n\n\n\n<li>It realized and deducted TDS only on 25th August 2025.<\/li>\n<\/ul>\n\n\n\n<p><strong>Calculation Of Interest<\/strong><\/p>\n\n\n\n<p>Since TDS was not deducted on time, interest is levied at 1% per month or part thereof from the date on which TDS was deductible to the date it is actually deducted.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Particulars<\/strong><\/td><td><strong>Details<\/strong><\/td><\/tr><tr><td>TDS deductible on<\/td><td>10th May 2025<\/td><\/tr><tr><td>TDS actually deducted on<\/td><td>25th August 2025<\/td><\/tr><tr><td>Interest Rate<\/td><td>1% per month<\/td><\/tr><tr><td>No. of months (May to Aug)<\/td><td>4 months (May, June, July, August)<\/td><\/tr><tr><td>TDS Amount<\/td><td>\u20b910,000<\/td><\/tr><tr><td>Interest Payable<\/td><td>\u20b910,000 \u00d7 1% \u00d7 4 = \u20b9400<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Penalty_and_Prosecution\"><\/span>Penalty and Prosecution<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_addition_to_interest\"><\/span>In addition to interest:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td>Late Filing Fee (Sec 234E)<\/td><td>\u20b9200\/day until return is filed<\/td><\/tr><tr><td>Penalty (Sec 271H)<\/td><td>\u20b910,000 to \u20b91,00,000 for failure to file return<\/td><\/tr><tr><td>Prosecution (Sec 276B)<\/td><td>May include rigorous imprisonment<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Quarterly_TDS_Return_Deadlines\"><\/span>Quarterly TDS Return Deadlines<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The TDS deposited with the Government should be filed as a report quarterly. These apply to forms 24Q, 26Q, and 27Q. <\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong><a href=\"https:\/\/www.caclubindia.com\/guide\/tds-return-filing-due-date\/\">Click here<\/a> To Know The TDS Payment and Return Filing Due Date For FY 2025-26<\/strong>.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1752127371932\"><strong class=\"schema-faq-question\">What is the interest on late payment of TDS?<\/strong> <p class=\"schema-faq-answer\">You&#8217;ll be liable to pay 1.5% interest per month plus possible penalties and prosecution.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1752127388690\"><strong class=\"schema-faq-question\">Can interest on TDS be waived?<\/strong> <p class=\"schema-faq-answer\">No. Interest under Section 201(1A) is mandatory and non-compoundable.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1752127398738\"><strong class=\"schema-faq-question\">How to deposit late TDS with interest?<\/strong> <p class=\"schema-faq-answer\">Deposit through NSDL (now Protean) portal using Challan ITNS 281. Interest must be paid separately along with the TDS amount.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1752127420578\"><strong class=\"schema-faq-question\">How to avoid TDS late filing penalty?<\/strong> <p class=\"schema-faq-answer\">Depositing TDS on or before the due date helps in avoiding the penalty on TDS.<\/p> <\/div> <\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Income Tax Department charges interest for delay in depositing TDS (Tax Deducted at Source). This article explains how interest [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":2540,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center 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center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-2539","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income-tax"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\r\n<title>Interest on Late Payment of TDS: Calculation with Formula - Tax Guide<\/title>\r\n<meta name=\"description\" content=\"The article details penalties for late TDS return filing including a daily and monthly interest for late or non-deduction\/deposit of TDS.\" \/>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.caclubindia.com\/guide\/interest-on-late-payment-of-tds\/\" 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