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Interest on late deposit of TDS – 3 % for delay of one day

Interest on late deposit of TDS is applicable @ 1.5 % per month or part thereof. The period for delay is taken from date of deduction to date of deposit. So, in specific cases a delay of one day may lead to pay interest @ 3 % . 


  • TDS deducted on 01.08.13. 
  • In this case, due date will be 07.09.13. 
  • If we deposit tax on 08.09.13, one day delay. 
  • Interest will be applicable for 2 months – From 01.08.13 (date of deduction) to 08.09.13 (date of deposit) for two months @1.5 % p.m=3% 

Clarification on 194I

As rent on plant & machinery and rent on property & furniture attracted different rate of TDS, there was lot of confusion which resulted in incorrect deductions leading to unintentional defaults.

This has now been addressed and from the FY: 2013-14, Section 194I (Rent Payment) has now been bifurcated into two sections as under:

  •  194I(a) – Rent for Plant & Machinery – 2%
  •  194I(b) – Rent for land, building & furniture – 10%
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