Interest calculation for delayed payment of TDS

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.

12 thoughts on “Interest calculation for delayed payment of TDS

    1. Faiz Anwar

      Date of deduction is 10 Nov
      Due date of payment is 7 Dec
      Actual payment made is on 4 Jan
      Hence, there is a delay in payment.
      As per department, since 3 calendar months are involved, you will have to pay interest @ 1.5% for 3 months, i.e., 4.5%

      Reply
  1. Ram chander

    Date of Tax Deduction 31/12/2015
    Date of Tax Deposited 12/02/2016

    As per above illustration, the month are 3 but traces mentioned 2 month in justification report.

    how is possible?

    Pleas advise

    Reply
    1. Harris

      Actually it will compute as 30 days i.e 31/12/2015 to 31/01/2016 is one month plus February month(Even part of the month till 29/02/2016). So, it will be 2 months default.

      Reply
  2. venkatesh

    my question is tds amount for commission is deducted on 15/01/2016 and paid on 02.04.2016. how to calculate the interest amount please

    Reply
  3. AMAR SWAIN

    My question is one party to payment rent Rs.17043/-dt-oct-2015 no tds deduction,till june-2016 countinence paid fully amount.i want to pay tds with interest. How to calculate tds interest please.

    Reply
  4. giri krishna

    My question is one party to payment Contract Bill Rs.60000/-dt- April 2016 no tds deduction,till MAr 2017 countinence paid fully amount.i want to pay tds with interest. How to calculate tds interest please.

    Reply
  5. Dharmesh Dedhia

    My question is one party to payment Contract Bill Rs.60000/-dt- march 2017 no tds deduction,bymistake i pay 2000 tds amount on 7th april 2017 . what is the interest calculate on rest amount or full amount & how much?

    Reply
  6. Ram Chander

    Date of Tax Deduction 30/06/2016
    Due Date for TDS Deposit (As per Traces Justification Report) 08/07/2016
    But as per Rule TDS Deposit Date is 07/07/2016

    Date of Tax Deposited 12/02/2016

    As per above illustration, the month are 6 but traces mentioned 5 month in justification report.

    how is possible?

    Please advise

    What is the base of calculation of months for late payment

    Reply
  7. Soma Saha

    Sir, Please help me about late payment of TDS : Bill date 04.10.18 Amount Rs.36854.58, (u/s 194C @2%). TDS payment will be made on 07.12.18. What would be the Interest amount?

    Reply

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