Work out the interest payable on late TDS under Section 201(1A): 1% per month for late deduction and 1.5% per month for late deposit. Any part of a month counts as a full month.
Interest under Section 201(1A): late deduction is 1% per month from the due date of deduction to the date it is deducted; late deposit is 1.5% per month from the date of deduction to the date of deposit. Part of a calendar month is treated as a full month.
When tax deducted at source (TDS) is deducted late or deposited late, the deductor must pay interest under Section 201(1A) of the Income-tax Act. There are two separate rates: 1% per month for failing to deduct on time, and 1.5% per month for deducting but depositing late. Crucially, interest is charged for every month or part of a month, so even a one-day delay into a new month adds a full month's interest.
How TDS interest is calculated
Interest = TDS amount × monthly rate × number of months (part month = full month)
₹10,000 TDS, late deposit (1.5%)
Interest
1 month
₹150
3 months
₹450
6 months
₹900
12 months
₹1,800
Worked example
TDS of ₹25,000 deducted in April but deposited 2 months and 5 days later: the 5 days count as a full third month, so interest at 1.5% for 3 months is 25,000 × 1.5% × 3 = ₹1,125.
Late deduction vs late deposit
Use 1% per month if the TDS was deducted late in the first place, counted from the date it should have been deducted. Use 1.5% per month if it was deducted on time but paid to the government late, counted from the deduction date to the deposit date. If both failures apply, each is charged for its own period.
Frequently asked questions
What is the interest rate on late TDS payment?
1.5% per month (or part) for late deposit; 1% per month for late deduction, under Section 201(1A).
Is part of a month counted fully?
Yes — any part of a calendar month is treated as a complete month, so timing your deposit before a month rolls over matters.
From which date is interest counted?
Late deduction: from the date TDS was due to be deducted. Late deposit: from the date of deduction to the date of deposit.
Is this interest tax-deductible?
No. Interest on late TDS is a statutory charge and is not allowed as a business expense.
Estimates for general guidance, not tax advice. Interest provisions can change; confirm the current position and consult a professional before filing.
Written by the CalcPine team · Reviewed for accuracy · Last updated 16 July 2026 · Method: TDS × monthly rate (1% deduction / 1.5% deposit) × months, part-month rounded up.
