Income Tax & TDS

TDS Interest Calculator

Calculate interest payable on late deduction or late deposit of TDS under Section 201(1A).

Under Section 201(1A) of the Income Tax Act, deductors who delay deducting or depositing TDS are liable to pay interest — 1% per month for late deduction, and 1.5% per month for late deposit. Enter your details below to calculate the exact interest liability.

The TDS amount deducted or deductible Enter a valid TDS amount greater than 0.
Choose which delay applies
Start date of the delay period Please select a valid start date.
End date of the delay period Actual date must be on or after the start date.

Interest Payable

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Months Counted

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Total Payable (TDS + Interest)

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How to Use This Tool

  1. Enter the TDS amount that was deducted or was required to be deducted.
  2. Select whether you are calculating interest for late deduction (1% per month) or late deposit/payment (1.5% per month).
  3. Enter the date tax was deductible or was actually deducted (the start of the delay period), and the actual date it was deducted or deposited (the end of the delay period).
  4. Click Calculate Interest to see the interest payable, the number of months counted, and the total amount due including interest.

TDS Interest Under Section 201(1A) Explained

When a deductor fails to deduct TDS on time, or deducts it but fails to deposit it with the government by the due date, the Income Tax Act levies interest under Section 201(1A) as a compensatory (not penal) charge for the delay. There are two distinct rates depending on the type of default:

In both cases, interest is calculated on a per-month or part-of-month basis — meaning even a delay of a single day into a new month is treated as a full month for interest purposes. This calculator applies that same rule: any part of a month counts as a complete month.

The Formula

Interest = TDS Amount × Rate (1% or 1.5%) × Number of Months

For example, if ₹50,000 in TDS was deducted 2 months and 5 days late, interest would be calculated for 3 months (since the 5 extra days count as a full additional month) at 1% per month: ₹50,000 × 1% × 3 = ₹1,500.

Why This Matters for Deductors

Under the TDS/TCS framework, businesses, employers and any entity required to deduct tax at source act as agents of the government. Delays — even unintentional ones caused by processing lags or cash flow issues — attract mandatory interest that cannot be waived by the deductor. Understanding this liability helps in:

Late Deduction vs. Late Deposit — Don't Confuse the Two

A common area of confusion is applying the wrong rate. Remember: 1% applies only to the delay in deducting the tax in the first place (i.e., you deducted TDS later than you were legally required to). 1.5% applies to the delay in depositing tax that has already been deducted, to the government's account. A single default can sometimes attract both types of interest sequentially if both the deduction and the deposit were delayed.

Interest Is Separate From Late Filing Fees

This interest under Section 201(1A) is separate from — and in addition to — the late filing fee under Section 234E (₹200 per day for late filing of TDS returns) and penalties under Section 271H. A single default can therefore attract multiple distinct charges, so it's important to calculate each separately.

Frequently Asked Questions

What is the interest rate for late deduction of TDS?

Interest is charged at 1% per month or part of a month, from the date the tax was deductible to the date it was actually deducted, under Section 201(1A) of the Income Tax Act.

What is the interest rate for late deposit of TDS?

Interest is charged at 1.5% per month or part of a month, from the date of actual deduction to the date the tax was actually deposited with the government.

Does a delay of just one day count as a full month of interest?

Yes. Under the "part of a month" rule applied by the Income Tax Department, any delay that spills even one day into a new month is treated as a complete additional month for interest calculation purposes.

Is TDS interest the same as the late filing fee under Section 234E?

No, they are different charges. Section 201(1A) interest is for delay in deducting or depositing TDS itself, while Section 234E is a separate late fee (₹200/day) specifically for delayed filing of the TDS return, and both can apply to the same default independently.

This calculator is provided for general informational and estimation purposes only. Results should not be treated as professional financial, tax, legal, medical, or engineering advice. Always verify critical calculations with a qualified professional or official source before making decisions.