Use the free TDS Interest Calculator above to instantly find out how much interest you owe on late TDS deduction, late deposit, or delayed return filing. Enter the TDS amount, select the type of default, enter the relevant dates, and get the result in seconds.
What Is TDS Interest?
In my 7 years of working with salaried professionals and business owners, one compliance cost that comes as a genuine surprise is TDS interest. Many deductors assume that paying the TDS eventually is enough. It is not. The Income Tax Act charges penal interest for every month of delay, and this amount adds up faster than most people expect.
TDS interest applies in three distinct situations:
Late Deduction:
When TDS is not deducted at the time of payment or credit to the payee, whichever is earlier. Interest at 1% per month is charged from the date on which TDS was deductible (date of payment or credit to the payee, whichever is earlier) to the date of actual deduction.
Late Payment or Deposit:
When TDS has been deducted from the payee but not deposited with the government by the prescribed due date. Interest at 1.5% per month runs from the date of deduction to the date of actual deposit. This is the most common default I see among the professionals I work with.
Late Filing of TDS Return:
When the quarterly TDS return is not filed within the due date. Unlike the above two, this attracts a flat fee of Rs. 200 per day under Section 234E rather than a percentage-based interest. The fee is capped at the TDS amount for that quarter.
An important point many deductors miss: if both late deduction and late payment occur in the same case, both interest rates apply for their respective periods. First, 1% per month for the period of late deduction, then 1.5% per month from the date of actual deduction to the date of deposit.
TDS Interest Rates at a Glance
| Type of Default | Section | Rate |
|---|---|---|
| Late Deduction | Section 201(1A) | 1% per month |
| Late Payment / Deposit | Section 201(1A) | 1.5% per month |
| Late Filing of TDS Return | Section 234E | Rs. 200 per day (max = TDS amount) |
One rule that catches many deductors off guard: even a part of a month is treated as a full month for interest calculation under Section 201(1A). If your deposit is delayed by 1 month and 5 days, interest is calculated for 2 full months, not 1.
This is not the same as how we calculate income tax itself. Understanding this distinction matters when you are computing the exact liability before making a payment.
TDS Interest Calculation Formula
For Late Deduction and Late Payment:
Interest = TDS Amount x Interest Rate x Number of Months
For Late Filing:
Fee = Rs. 200 x Number of Days of Delay (maximum = TDS Amount for that quarter)
Worked Example: Late TDS Deposit
Let me walk you through a practical example.
Ramesh runs a small consulting firm in Bengaluru. He deducts Rs. 60,000 as TDS on professional fees paid to a freelancer on 15th May 2024. The due date for depositing this TDS was 7th June 2024. Due to a cash flow crunch, the deposit was made on 10th September 2024.
Type of default: Late Payment under Section 201(1A) Period: 15th May 2024 to 10th September 2024 = 4 months Interest rate: 1.5% per month Interest = Rs. 60,000 x 1.5% x 4 = Rs. 3,600
Ramesh pays Rs. 3,600 as interest in addition to the TDS amount. Had the deposit been made by 7th June, this cost would have been zero.
You can calculate your own liability in seconds using the calculator above. Select Late Payment, enter Rs. 60,000, set the dates, and click Calculate.
For context on how TDS fits into your overall salary tax picture, my guide on TDS on Salary under Section 192 explains the deduction mechanism in detail.
TDS Deposit Due Dates
Knowing the due dates is the first step to avoiding interest entirely.
| Month of TDS Deduction | Due Date for Deposit |
|---|---|
| April to February | 7th of the following month |
| March | 30th April |
For TDS on property purchase under Section 194IA and rent under Section 194IB, the due date is 30 days from the end of the month in which the deduction was made.
Missing even one deposit date triggers Section 201(1A) interest from that date onward. The government does not give grace periods beyond what is stated above.
TDS Return Filing Due Dates
TDS returns are filed every quarter. The due dates for non-government deductors are:
| Quarter | Period | Due Date |
|---|---|---|
| Q1 | April to June | 31st July |
| Q2 | July to September | 31st October |
| Q3 | October to December | 31st January |
| Q4 | January to March | 31st May |
Filing even one day after these dates triggers Section 234E at Rs. 200 per day. For a TDS amount of Rs. 50,000, a 60-day delay means Rs. 12,000 in fees alone, which is 24% of the TDS amount.
How to Use This TDS Interest Calculator
The calculator is designed to give you a result in under a minute:
Step 1:
Enter the TDS amount that was short deducted or deposited late.
Step 2:
Select the type of interest calculation from the dropdown. The date fields will update automatically based on your selection.
Step 3:
Enter the relevant start and end dates. For Late Deduction, this is the date on which TDS was deductible and the date of actual deduction. For Late Payment, this is the deduction date and the deposit date. For Late Filing, this is the start and end date of the return filing period.
Step 4:
Click Calculate Interest. The breakdown shows the interest type, applicable rate, number of months or days, and the total amount payable.
To start over, click Reset.
Why TDS Interest Costs More Than You Think
Many of the salaried professionals and business owners I work with underestimate TDS interest for one reason: it is not tax deductible. Interest paid under Section 201(1A) and the fee under Section 234E cannot be claimed as a business expense. They come directly out of your pocket.
Beyond interest, defaulting on TDS can also lead to:
Disallowance of the expense under Section 40(a)(ia), where 30% of the payment to the contractor or professional is disallowed in the deductor’s own income tax return if TDS was not deducted or deposited correctly.
A penalty equal to the TDS amount under Section 271C for failure to deduct.
Prosecution in cases of wilful and repeated default.
For salaried individuals, the impact shows up differently. If your employer deducts TDS but does not deposit it, your Form 168 (earlier Form 26AS) will not reflect the credit. You end up paying tax that was already deducted from your salary. This is why I always advise checking Form 168 before filing your ITR every year. My guide on How to Read Form 26AS and AIS walks you through this in detail.
TDS compliance also directly affects your ITR filing accuracy. If you are filing your return and want to understand which form applies to your income situation, refer to my article on Which ITR Form to File for FY 2025-26. And if you have already missed a deadline, the Belated Return vs Revised Return guide explains your options.
For official TDS provisions and circulars, you can refer to the Income Tax Department’s website at incometax.gov.in.
Frequently Asked Questions
What is the interest rate for late TDS deduction?
Under Section 201(1A), interest at 1% per month is charged for late deduction of TDS. It runs from the date on which TDS was deductible (date of payment or credit to the payee, whichever is earlier) to the date of actual deduction.
What is the interest rate for late deposit of TDS?
Interest at 1.5% per month is charged under Section 201(1A) for late deposit. It runs from the date of deduction to the date of actual deposit with the government.
Does part of a month count as a full month?
Yes. For interest under Section 201(1A), any part of a month is treated as a complete month. A delay of 2 months and 3 days means interest for 3 full months.
What is Section 234E?
Section 234E levies a fee of Rs. 200 per day for late filing of quarterly TDS returns. The total fee for any quarter cannot exceed the TDS amount for that quarter.
Is TDS interest tax deductible?
No. Interest paid under Section 201(1A) and fees paid under Section 234E are not deductible as a business expense.
What if both late deduction and late payment happen in the same case?
Both interest rates apply for their respective periods. Interest at 1% per month applies from the date TDS was deductible to the date of actual deduction. Then interest at 1.5% per month applies from the date of deduction to the date of deposit.
What happens if TDS is not deducted at all?
The deductor is treated as an assessee in default under Section 201. Interest at 1% per month applies from the date of payment or credit to the payee to the date of actual deposit. A penalty up to the TDS amount can also be levied under Section 271C.
Can I use this calculator for multiple TDS defaults?
The calculator computes interest for one TDS amount and one period at a time. For multiple defaults in the same quarter, calculate each separately and add the amounts.