TDS Interest Calculator for Late Deduction and Late Payment
Enter the TDS amount and three dates — when tax was due to be deducted, when it was deducted and when it was deposited. Get the interest for each delay and the total.
Date of payment or credit to the payee, whichever is earlier.
Result
- Late deduction — 3 months @ 1%
- ₹600.00
- Deposit was due by
- 07-07-2026
- Late payment — 3 months @ 1.5%
- ₹900.00
- Total interest
- ₹1,500.00
Part of a month counts as a full month. Pay the interest before filing the TDS statement.
Quick answer
Interest on TDS is 1% a month or part of a month from the date tax was deductible to the date it was deducted, and 1.5% a month or part of a month from the date of deduction to the date of deposit, when the deposit is after the due date (the 7th of the next month; 30 April for March). These rates are in section 398(3) of the Income-tax Act, 2025.
| Not deducted on time | 1% a month or part |
|---|---|
| Deducted, deposited late | 1.5% a month or part |
| Deposit due | 7th of next month (30 April for March) |
| Part of a month | Counts as a full month |
| Law | Income-tax Act, 2025 — section 398(3) |
TDS has two deadlines: deduct the tax when the payment is made or credited, and deposit it with the government by the 7th of the following month. Missing either costs interest, and the two are charged separately for their own periods.
The rates carried over unchanged into the Income-tax Act, 2025, which applies from 1 April 2026. Interest must be paid before the TDS statement for the quarter is filed. Rates and limits as of 13 October 2026.
The formula
- Late deduction
TDS × 1% × Months (deductible date → deduction date)- Late payment
TDS × 1.5% × Months (deduction date → deposit date)- Months
Every calendar month touched, part of a month counted as a month
A worked TDS interest example
TDS of ₹20,000 was deductible on 10 April, actually deducted on 5 June and deposited on 8 August. Late deduction: April, May and June are 3 months, so 20,000 × 1% × 3 = ₹600. The deposit was due on 7 July; it was made on 8 August, so late payment runs from June to August — 3 months — 20,000 × 1.5% × 3 = ₹900. Total interest ₹1,500.
One day's delay past the 7th turns into a full month's interest, and the month of deduction itself is counted. Depositing on the 7th instead of the 8th is worth 1.5% of the tax.
Interest, late fee and penalty are different
Interest compensates for the delay in tax reaching the government. The late fee is for filing the quarterly TDS statement late — ₹200 a day, up to the amount of TDS. A penalty can also be levied for failing to deduct at all. Interest is not deductible as a business expense.
If TDS was not deducted because the payee had already paid tax on that income, interest still runs up to the date the payee filed the return — a detail worth checking before paying it.
Keeping TDS on time
Most interest comes from vendor bills entered late, so the TDS is deducted weeks after the expense was booked. Entering purchase bills when goods arrive, with the TDS section set on each vendor, keeps deduction dates right; a monthly reminder before the 7th keeps deposits right.
Questions people ask.
What is the interest on late payment of TDS?
1.5% a month or part of a month from the date of deduction to the date of deposit, when the deposit is made after the due date.
What is the interest if TDS is not deducted?
1% a month or part of a month from the date it was deductible to the date it is actually deducted.
How are months counted for TDS interest?
Part of a month counts as a full month, and the months are counted the way the TRACES statement does — every calendar month the period touches, both ends included.
What is the due date for depositing TDS?
The 7th of the following month. TDS deducted in March can be deposited up to 30 April.
Which section covers TDS interest now?
Section 398(3) of the Income-tax Act, 2025, from 1 April 2026; earlier it was section 201(1A) of the 1961 Act. The rates did not change.
Is interest on late TDS an allowable expense?
No. Interest on TDS is not deductible when computing business income.
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