TDS Interest Calculator (Late Deduction,Payment,Filing)

Interest on Late Deduction
Interest on Late Payment
Interest on Late Filing

TDS Interest Calculator - Late Deduction, Payment, & Filing

Online TDS Interest Calculation tool. Calculate Late Deduction, Late Payment, and Late Filing of TDS.

Why it is Important to Pay Interest When there is delay in Paying TDS Amount?
There could be various reasons leading to the delay in payment of TDS. If the deductor deposits TDS (after the due date) without interest, upon processing of the return, they may receive a demand notice from TRACES with interest and penalty, if any. So, whenever there is a delay in the Deposit of TDS, it is recommended to pay the applicable interest as well.

In case you fail to deposit TDS by the correct date, the following penalties are applicable:
Late filing fee (if you do not file the return by cut-off date)
Interest (if you do not deposit the TDS amount in time)
Penalty (if TDS is not filed within one year from the due date)

There are three types of Interest / Late filing fee of Late Payment of TDS.
Interest on Late Deduction of TDS
Interest on Late Payment of TDS
Fee on Late Filing of TDS

Note: The last date for filing TDS Returns of Q4 of 2019-20 is 31st July 2020. Normally it is 30 days from the end of the Financial Year, which is 30th April every year. However, for the Financial year 2019-20 it is extended due to COVID Pandemic. Also, the Due dates for Q1 and Q2 of 2020-21 have been extended to 31st March 2021.
(All TDS Rates for Non-Salary payments have been cut by 25% upto 31st March 2021. That is, if the normal rate of TDS is 10%, now TDS is to be done at 10 - 25% = 7.5%.)

The interest is to be calculated as per the explanation and examples mentioned below:

Interest on Late Deduction of TDS
Under Section 201A, you will have to pay interest of 1% per month or part of the month from the date on which TDS is deductible (on the Day of Transaction) to the date on which TDS is deducted. This applies to “Non-deduction of tax at source, either in whole or in part”.

Example: Interest calculation on Late Deduction of TDS
If tax was deductible on 12th April (i.e. at the time of giving credit to the party or actual payment of the dues, whichever is earlier) but was deducted on 3rd May, then the TDS interest charged would be 1% of the amount of late deduction.
TDS deductible on 12th April 2020
TDS deducted on 3rd May 2020
TDS Amount Rs. 12300
Interest on Late Deduction = 12300 * 2 months * 1/100 = 246.
Note: Calendar Month April 2020 and Calendar Month May 2020 are considered for Calculation

Interest on Late Payment of TDS
Under Section 201(1A), you will have to pay interest of 1.5% per month or part of the month, from the Date of Deduction(of TDS) to the Date of Payment. This interest applies to “Non-payment of tax after deduction, either in whole or in part”.

Example: Interest calculation on Late Payment of TDS
Tax Deducted on 19th March 2020
TDS deposited on 4th May (due date was 30th April)
19th March – 31st March – 1 Month
1st April to 30th April – 2nd Month
1st May to 4th May – 3rd month
Each month is treated based on the ‘Calendar Month’ instead of counting the number of days. For calculating delay in a month, each month is treated based on ‘Calendar Month’. So, even though there is a delay of 4 days, the interest payable is for three months. The total interest would be 4.5%.

Late Filing of TDS as per Income Tax Act
If the quarterly returns are not filed within the prescribed due dates, a late fee of Rs 200 per day (two hundred) is applicable under section 234E. However, such a fee is restricted to a maximum of the amount of TDS.
Further, as a relief measure of Corona Pandemic, the due date for the return of Q4 FY 2019-20 has been extended to 31st July 2020.

Example: Interest calculation on Late filing of TDS Returns
Return to be filed on 31st July, TDS amount Rs. 4000
Return filed on 14th December
Period of delay: 136 days
Applicable Late fee is Rs. 27200 (Rs.200 X 136). However, since this amount is greater than the TDS amount of Rs 4000, the late fee is restricted to Rs 4000. Besides, you are also liable to pay interest.

TDS Interest for the period of March 2020 to June 2020
Honourable Finance minister Smt. Nirmala Sitharaman announced a slew of measures for extension of statutory and regulatory compliances in view of the coronavirus pandemic spreading its wings and impacting the economy. For delayed Deposit of TDS, interest has been reduced to 9% (0.75% per month) from 18% (1.5% per month) for those where the TDS is due from 20th April 2020 to 30th June 2020. This benefit is available only if such TDS is remitted to the credit of government on or before 30.06.2020. Many Organisations are forced to make delayed TDS Deposit due to the situation prevailing in the country, and this online free TDS Calculator will compute and give details of the interest on late payment of TDS, interest on delayed TDS payment and late fee for delayed filing TDS.

Related Topics
FAQ & Terminology
TDS Rates of Current Financial Year