Interest on Late Payment of TDS

      23 Comments on Interest on Late Payment of TDS

In case the assessee deposits the TDS Payment after the due date of payment of the tax deducted at source, he shall be liable to pay interest @1.5% for every month or every part of the month during which the amount is not deposited with the government.

Earlier, the Interest liable to be paid was 1% but this has been increased to 1.5% pm with a view to discourage the practice of delaying the deposit of tax after deduction.

Interest @ 1.5% is liable to be paid from the date on which the TDS was deducted and not from the date the TDS was due. 

For example: TDS was deducted on 25th June and the due date for TDS Payment was 7th July. The assessee fails to deposit the TDS by 7th July. In such a case, the Interest would be calculated from 25th June and not from 7th June.

The interest is to be calculated as per illustrations below: 

Case 1:

Tax Deducted on 26th June, TDS deposited on 9th July (due date was 7th July)

The period of 26th June to 30th June will be calculated as one month (being part of a month) & from 1st July to 9th July will also be treated as one month. As such in this case, the interest payable is for two months. Total interest would be 3%. Sounds odd, but it is true –  for a delay of 2 days, one has to pay interest for two months. 

Case 2:

Tax Deducted on 20th March, TDS deposited on 5th May  (due date was 30th April)

The period of 20th March to 31st March will be calculated as one month, 1st April to 30th April will be another month & from 1st May to 5th May will be treated as another one month. As such in this case, the interest payable is for three months. Total interest would be 4.5%. For a 5 day delay, the interest payable is for 3 months. 

Logic behind this calculation is that, if dues are not paid on time, the interest for each month (or part thereof) is to be paid right from the date of deduction till date of deposit of the TDS. Each month is treated based on the Calendar Month instead of counting the number of days.

23 thoughts on “Interest on Late Payment of TDS

  1. Rushikesh

    if demand notice for Fy 2009-10 have received demanding interest on late payment of tds specifying only one consolidated figure then under which section it should be deposited?

    Reply
  2. Santosh kumar devella

    It appears as a punishment not as levying interest, even bankers under negotiable instrument act are not chargeing like this, it appears to be rerdiculous

    Reply
  3. srinath

    Sir,
    we have paid interest on late payment of TDS for two months,but as per notice interest should be paid for three months.Please advice how to prepare challan only for interest on late pay of TDS for the one month and how to show challan details while revising the return

    Reply
    1. SUNIL JAGTAP

      After the paid interest challan all is need to download a consolidated file from traces and validate in the RPU by add the challan and write the amount in the interest coloumn and then validate it in the RPU.

      Reply
  4. Mir Shafeequr Rahman

    sir,
    In case of IT RETURNS deducted & submitted every quarterly instead of monthly,why the penalty is being levied?

    Reply
  5. ARYAA

    Sir,

    Kindly give us suggestion regarding Additional late payment of interest,what is the reason and default behind this…

    Reply
  6. SUNIL JAGTAP

    Please give the payment option on the traces side (tdscpc.gov.in) hence the Demand is raised in the fever of late payment interest or late filling fees and there is no need to validate the Revised statement of that asesse

    Reply
  7. Ram

    We have received invoice on January 28, 2014. We have 60days credit period. In this case, do we need to pay TDS by 7th of February, 2014? I heard that TDS has to be paid to govt by 7th of following month considering Invoice date as reference but not the actual payment made by me to supplier. Is this correct?

    Please clarify.

    Reply
  8. Bipin

    i have deducted tds on 1st feb2014 but not paid till date. plz tell me how many months interest i have to paid

    Reply
    1. Mani Ranjan Suman

      Dear Bipin,
      as per the provisions of law you will have to deposit the interest for 3 months if you are going to deposit your outstanding on or before 30th of april-2014

      Reply
    2. Ritesh D. Bansod

      Dear Sir,

      I deducted TDS on May,14 but we are made payment upto date means 9.07.2014 So Can you suggest me How much Interest I paid ( Its Calculate on Day basis or Month basis)

      Reply
  9. Rashmi Gaur

    Till date, I am waiting for my TDS refund for FY 2012-2013, also write and number of inquiry made to CPC Bangalore and thru mail to the Commissioner of I.T. Delhi and Chandigarh Branch (thru email).

    But, even a single line mail not recd. PAN # APGPG6140G

    Regards

    Reply
  10. Rakesh

    Dear Sir,

    I have not deposited TDS amount from April – June 2014 now we want to pay in the month of july 2014 so what will be the Interest rate of TDS amount

    Reply
  11. ROHIT VERMA

    dear sir,
    i can’t submited my return fy 2014-15& Q1.Deducation amount is 11500.
    how many interest i will pay?
    How many late fees i will pay?

    Reply
  12. dilpa shah

    i have deducted tds on 30.4.15 and paid the same tds on 11.7.15, then how many months delay interest will be payable on it?

    Reply
  13. AJAY KISHORE JHA

    We got a demand notice in year 2012 for F.Y. 2009-10 for delayed deposit of TDS wherein Income Tax department calculated interest on one month of delay. We deposited the demand as per the demand notice in year 2012. Now in 2016 we got the demand notice from Income Tax department for same F.Y. 2009-10 wherein calculation of interest is on two month of delay and again demanding the balance amount to be deposited. Can I know that from which year this type calculation of period is applicable in the case of delayed deposit of TDS.

    Reply
  14. Ishwar Rathore

    If TDS deducted on last date of proceeding month and It deposited on next 8th then what % of interest will be calculated.

    Reply

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