TDS Interest Calculator — Discovery

What is TDS Interest?

When a deductor fails to deduct TDS, or deducts but does not deposit it with the government on time, interest is levied under Section 201(1A) of the Income Tax Act, 1961.
Separate interest rates apply for late deduction vs late deposit.
Additionally, late filing of TDS returns attracts a fee under Section 234E and a penalty under Section 271H.

Interest Rates (FY 2025-26, verified March 2026)

Default	Section	Rate	Period
Late deduction	201(1A)	1% per month	Date payment made → Date TDS deducted
Late deposit	201(1A)	1.5% per month	Date TDS deducted → Date TDS deposited
Late filing fee	234E	Rs 200/day	Due date → Filing date (capped at TDS amount)
Late filing penalty	271H	Rs 10,000–Rs 1,00,000	At AO’s discretion

Critical rule: Part of a month = full month for interest calculation.

TDS Deposit Due Dates

All months except March: 7th of the following month
March: 30 April (not 7 April)
Government deductors: same day as deduction

TDS Return Due Dates (FY 2025-26)

Quarter	Period	Due Date
Q1	Apr–Jun	31 July
Q2	Jul–Sep	31 October
Q3	Oct–Dec	31 January
Q4	Jan–Mar	31 May

Budget 2024 Amendment — Section 271H (CRITICAL)

Effective 1 April 2025
Safe-harbor period reduced from 1 year to 1 month
Previously: no penalty if return filed within 1 year of due date (with TDS + fees paid)
Now: no penalty only if return filed within 1 month of due date
This significantly tightens compliance for FY 2025-26 onwards

Section 271C — Penalty for Non-Deduction

If TDS is not deducted at all, penalty under Section 271C = amount equal to TDS not deducted
This is in addition to interest under 201(1A)

JTBD

“I deposited TDS late — how much interest do I owe?”
“I forgot to deduct TDS on a contractor payment — what’s the penalty?”
“I filed my TDS return late — how much is the 234E fee and 271H penalty?”

Calculator Tabs

Late Deposit Interest — TDS amount, date deducted, date deposited → 1.5%/month interest
Late Deduction Interest — TDS amount, date payment made, date actually deducted → 1%/month interest
Late Filing Penalty — return due date, actual filing date, TDS amount → 234E fee + 271H penalty

Key Notes for Implementation

Interest is on TDS amount, not gross payment
Interest is mandatory and not deductible as business expense (Section 40(a)(ii))
Must be paid before filing TDS return
Part month = full month (this catches many people)
Both late deduction interest AND late deposit interest can apply simultaneously (different periods)

Sources

Income Tax Department: incometax.gov.in
Section 201(1A) — Interest on late deduction/deposit
Section 234E — Late filing fee
Section 271H — Late filing penalty
Finance (No. 2) Act, 2024 — Amendment to Section 271H (1 year → 1 month)
CBDT Notifications and Circulars
cleartax.in/s/tds-payment-due-dates-and-penalties
taxguru.in/income-tax/section-201-1a-interest-late-payment-tds.html