TDS late payment interest runs at 1% a month if you deduct tax late and 1.5% a month if you deduct on time but deposit late, under section 201(1A) of the 1961 Act. Interest is charged for a whole month even when only part of it is late, so even one day's delay costs a whole month's interest.
The calculator on this page takes four inputs: the TDS amount, the date the tax should have been deducted, the date it was actually deducted, and the date it was paid. It returns the interest for each stage at 1% and 1.5% and the total, counting part months in full. Use the result as the interest figure to add to your Challan 281 payment. It runs in your browser and keeps nothing.
Quick facts
Late deduction
1% a month from the date tax was deductibleLate deposit
1.5% a month from the date of deductionPart month
Counted as a full monthLate return fee (234E)
₹200 a day, capped at the TDS amountPenalty (271H)
₹10,000 to ₹1,00,000 in some casesUnder the 2025 Act
Interest now in section 398
TDS late payment interest rates: section 201(1A) explained
| Default | Rate | Runs from | Runs to |
|---|---|---|---|
| Tax not deducted, or deducted late | 1% a month or part | Date tax was deductible | Date actually deducted |
| Tax deducted but deposited late | 1.5% a month or part | Date of deduction | Date of payment |
Note the second row: the clock starts on the day you deducted, not on the deposit due date, which is the 7th of the next month. That is why a two-day delay past the 7th often shows two months of interest. TRACES counts each calendar month touched by the period, including the starting month.
How TDS interest calculation works: a worked example
A design studio and a consultant. The studio books a ₹4,00,000 professional fee on 18 July. TDS at 10% under 194J is ₹40,000.
- It forgets to deduct and only deducts on 5 September. Months touched: July, August, September, so 3 months at 1%: ₹40,000 × 3% = ₹1,200.
- It then pays on 12 October instead of by 7 October. Months touched from the deduction date: September and October, so 2 months at 1.5%: ₹40,000 × 3% = ₹1,200.
- Total interest: ₹2,400, paid with the TDS in the same Challan 281 under the interest head.
A March deduction gives a longer window: tax cut on 28 March is due by 30 April, but if paid on 2 May the months touched are March, April and May, so 4.5% on the amount.
Using the TDS interest calculator
Enter the dates exactly as they appear in your books. If tax was deducted on the right day, put the same date in both the "due to be deducted" and "deducted" boxes, and the 1% part shows zero. Read the result line by line: months at 1%, months at 1.5%, the interest for each, then the total. Round up to the next rupee when you pay. If TRACES later raises a different figure, compare its month count with yours; the difference is usually the March or start-month rule.
Late filing fee under 234E and the 271H penalty
| Provision | Amount | Notes |
|---|---|---|
| Section 234E late fee | ₹200 for every day of delay | Capped at the TDS amount for that return; pay before filing |
| Section 271H penalty | ₹10,000 to ₹1,00,000 | For a late or incorrect statement; not levied if tax, fee and interest are paid and the return is filed within one year of the due date |
| Section 40(a)(ia) | 30% of the expense disallowed | If TDS on a resident payment is not deducted, or not paid by the return due date |
Late fee example. A shop files its July to September return, due 31 October, on 19 December. That is 49 days late, so the fee is ₹9,800. Its TDS for the quarter was ₹6,000, so the fee is capped at ₹6,000.
Interest on TDS in the Income-tax Act, 2025
For defaults from tax year 2026-27, the same two rates apply under section 398 of the 2025 Act: 1% a month for failure to deduct and 1.5% a month for failure to pay after deducting. Defaults relating to FY 2025-26 stay under section 201(1A), even if you pay them now. Is interest on TDS disallowed as a business expense? It is generally treated as not deductible, because it is linked to the tax and not to earning income; check with your accountant for your case.
Pay the interest on the portal
- The TAN is the user ID for signing in to the e-filing portal.
- Open e-File, then e-Pay Tax, then New Payment, and pick Challan No./ITNS 281.
- Select the section code, the assessment year and "TDS payable by taxpayer".
- Enter the tax under Tax and the interest from the calculator under Interest, then pay.
- Quote the challan in the quarterly return, and check the default status on TRACES after processing.
Pages linked from this calculator
| Page | Covers |
|---|---|
| Start here | Plain meaning of deduction at source |
| Rate chart | Which percentage applies to which payment |
| Smaller sections | Dividends, winnings, insurance and PF |
| Due dates | The 7th of the month and quarterly deadlines that start the interest clock |
| Challan 281 | How to clear the arrears, interest included |
| Return filing | Reporting the late challan in Form 24Q, 26Q or 27Q |
| TRACES | Reading a default notice and paying the demand |
| TDS calculator | The deduction itself, before any delay |
| Salary | Employer deduction under section 192 |
| Interest | Section 194A for loans and deposits |
| FD interest | What a bank cuts and the FD interest TDS limit |
| Contractors | Section 194C work payments |
| Commission | Section 194H brokerage |
| Rent | Section 194I for business premises |
| Fees | Section 194J for professionals |
| Property | 1% on a purchase of ₹50 lakh or more |
| NRI seller | Section 195 on property bought from a non-resident |
| Goods | Section 194Q for big buyers |
| Perks | Section 194R on business benefits |
| Cash | Section 194N on large withdrawals |
| Crypto | Section 194S on digital asset transfers |
| E-commerce | Section 194O on marketplace sales |
| Partners | Section 194T, including partner interest TDS |
| Non-filers | The removed 206AB higher rate |
| Certificates | Form 16A and the payee's proof of credit |
| Form 121 | Declaration to receive interest without TDS |
| Refunds | When too much tax was cut |
| TDS and TCS | How the two systems differ |
| GST TDS | The deduction under GST law, with its own 18% interest |
This calculator and page are general information only. Interest rules can change and TRACES has the final word on the figure, so match its demand before paying.
Sources we checked
- Income-tax Act, 1961, section 201(1A)
- Income-tax Act, 1961, sections 234E and 271H
- Income-tax Act, 2025, section 398
- Income-tax Act, 1961, section 40(a)(ia)
Frequently asked questions
What is the interest on late payment of TDS?
It is 1.5% a month or part of a month, counted from the date tax was deducted to the date it was paid. If tax was not deducted on time, 1% a month also applies for that earlier period.
Does a part of a month count as a full month?
Yes. TDS interest is charged for each month or part month, so a delay of one day past the due date can cost a full month.
What is the late fee under 234E of the Income Tax Act?
₹200 for each day the TDS return is late, up to the total TDS in that return. It must be paid before the return is accepted.
Which section covers interest on late TDS?
Section 201(1A) of the 1961 Act for FY 2025-26. For tax year 2026-27 the same rates are set by section 398 of the Income-tax Act, 2025.
Can the 271H TDS penalty be avoided?
Yes, if the tax, late fee and interest are paid and the statement is filed within one year of its due date, the 271H penalty is not levied for late filing.