Under Section 201(1A), the interest for late payment of TDS is 1.5% per month (or part of a month) on the amount that was not deposited on time.
What is interest u/s 220 2?
Under Section 220(2), interest is 1% per month (or part of a month) on any demand notice that remains unpaid after the prescribed period.
Think of this as a flat, non-compound charge applied to whatever amount the notice shows. The rate comes straight from the Finance Act and stays the same whether you owe ₹100 or ₹10 million. Interest kicks in the day after your payment window closes. The Income Tax Department updates these rates every year in the Finance Act—you can always check the latest numbers here.
How is interest on late payment of TDS calculated?
Interest is calculated by multiplying the outstanding TDS amount by the monthly rate (1.5%) and by the number of months (or part-months) between deduction and deposit.
Say you left ₹15,000 of TDS sitting for 2 full months. The math is ₹15,000 × 2 × 1.5% = ₹450. Even a 10-day delay counts as a whole month, so don’t hope for partial relief. Many taxpayers double-check with the Investopedia simple-interest calculator or a quick spreadsheet. The IRS also has an online interest calculator if you want a second opinion.
What is the interest rate if the TDS is not deducted on a transaction?
If TDS is not deducted at all, Section 201A imposes an interest rate of 1% per month on the amount that should have been deducted.
Missed the deduction but still paid the tax? That’s a 1% charge. If you actually deducted the tax but never deposited it, the rate jumps to 1.5%. Interest starts piling up the moment the deduction was due and keeps running until the bill is cleared. Both rates are simple interest—no compounding tricks here. The Reuters tax policy update (2025) confirms these numbers were still in force as of 2026.
Is TDS due date for March 2021 extended?
Yes—the government extended the filing deadline for the March 2021 quarter to 30 June 2021.
The original deadline was 30 April 2021, but the Finance Ministry gave everyone an extra two months because of pandemic disruptions. File by the new date and you dodged late fees plus interest. Just remember this grace period only covered the quarterly TDS return, not the actual tax you owed. The Income Tax Department’s official portal spelled out the change.
How can I pay TDS late?
You can make a late TDS payment through the online TDS/TCS portal by selecting the appropriate challan and paying the accrued interest and penalty.
Head to the e-TDS portal, pick “(200) TDS/TCS Payable by Taxpayer” for routine payments or “(400) TDS/TCS Regular Assessment” if you’re responding to a demand notice. Generate the challan, pay via net banking or a bank branch, and save the receipt. The system adds 1.5% interest per month plus penalties under Section 234E automatically. The portal even has step-by-step guides and video walkthroughs.
How do I calculate interest?
Simple interest is calculated using the formula: Interest = Principal × Rate × Time.
For TDS, your principal is the unpaid amount, the rate is 1.5% per month (or 1% if you never deducted anything), and the time is the number of months—or partial months—between when you should have paid and when you actually did. A ₹25,000 balance left hanging for 1.5 months? That’s ₹25,000 × 1.5% × 1.5 = ₹562.50 in interest. Round up any partial month and use a calculator or spreadsheet to be sure. The IRS Publication 550 has a plain-English breakdown of simple interest in tax situations.
What is TDS interest rate?
The statutory TDS interest rate is 1.5% per month (or part of a month) for late deposit under Section 201(1A).
That 1.5% kicks in when you deducted the tax but didn’t send it in on time. If you never deducted it at all, the rate drops to 1% per month under the same rule. Interest keeps running until the full amount is settled, and it’s always simple interest—never compounded. The Income Tax Department’s website lists the current rates and walks you through the calculation.
What is new TDS rate?
The TDS rates for most payments remained unchanged in the 2024–25 Finance Act, with the standard 10% rate applicable to many contracts and professional fees.
Other categories—like interest on securities, rent, and insurance—range from 0.75% to 5%, as laid out in the Finance Act schedule. These figures took effect on 1 April 2024 and are still in force in 2026. When in doubt, grab the latest numbers from the Income Tax Department’s TDS rate chart.
How is TDS calculated?
TDS is calculated by applying the statutory percentage to the taxable amount after deducting eligible exemptions under Section 10.
Start with the gross income for the period, subtract exemptions such as agricultural income or certain allowances under Section 10, then multiply the net figure by the correct TDS percentage—usually 10% for professional fees. The result is the amount you must deduct at source and send to the tax authorities. For instance, ₹100,000 in professional fees with no exemptions means ₹10,000 in TDS. The official portal even has a TDS calculator for different payment types.
What is the due date of TDS payment for March 2021?
The due date for TDS payment for March 2021 was extended to 31 May 2021.
That extension only applied to the quarterly TDS return; the underlying tax started accruing interest from the original due date of 30 April 2021. File by 31 May 2021 and you avoided the ₹200-per-day penalty under Section 234E. After that, the usual rule—payment by the 7th of the next month—kicked back in. You can still see the official notice on the Income Tax Department’s archive.
What is the due date for payment of TDS for April 2021?
For the April 2021 quarter, the TDS return had to be filed by 31 March 2022, with the payment due on 7 April 2021.
The quarterly schedule for 2021–22 looked like this:
| Quarter |
Period |
Due Date for Return |
| Q1 |
April – June 2021 |
31 March 2022 |
| Q2 |
July – September 2021 |
31 July 2021 |
| Q3 |
October – December 2021 |
31 January 2022 |
| Q4 |
January – March 2022 |
Payments are normally due by the 7th of the month after the quarter ends, unless the tax authorities announce an extension. Always check the official portal for the exact date before the month starts.
Can TDS return be revised after due date?
Yes—a TDS return can be revised after the due date by filing a revised return under Section 139(5).
There’s no hard deadline for revisions, but interest and penalties on the original error can still pile up. File the revision through the e-TDS portal and clear any extra tax or interest quickly to stop the meter. For big corrections, a tax pro can often help you minimize penalties. The Income Tax Department’s FAQ has the step-by-step process.
Can TDS be paid late?
Late payment of TDS attracts a penalty of ₹200 per day under Section 234E, up to the amount of TDS itself.
The daily fee starts the day after the due date and keeps adding up until you pay. The total penalty can’t exceed the original TDS amount, so a ₹50,000 bill 30 days late costs ₹6,000 (₹200 × 30). Pay both the TDS and the penalty together and the clock stops. I’ve seen many taxpayers caught off guard by this—settle late payments as soon as you can.
Can TDS be paid on Sunday?
If the statutory due date falls on a Sunday or bank holiday, payment may be made on the next working day without additional penalty.
The Income Tax Act gives you this breathing room because banks are closed on Sundays and holidays. Interest, however, keeps piling up until the money is in the government’s account, so aim to pay as soon as banks reopen. Hold onto the transaction receipt—it’s your proof of compliance. The Reserve Bank of India’s holiday calendar lists all bank holidays for the year.
What is the due date for payment of TDS?
Generally, TDS must be deposited by the 7th day of the month following the month in which the deduction was made.
For example, TDS deducted in July must reach the government by 7 August. The March quarter is an exception—it’s due by 30 April—or any other date the authorities announce. Miss that deadline and you’ll owe 1.5% interest per month plus daily penalties under Section 234E. Always verify the exact due date on the official portal before the payment month begins.
