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TDS · Section 201(1A)

TDS Interest Calculator

Interest under Section 201(1A) is 1% per month for late deduction (from the date tax was deductible to the date deducted) and 1.5% per month for late deposit (from the date deducted to the date deposited). Any part of a calendar month is treated as a full month.

Part of a month counts as a full month. The month count spans the calendar months touched between the two dates.

How TDS interest is computed

Interest = TDS × Rate × Months. The number of months is counted treating any part of a month as a full month. For late deposit, courts and the department count from the month of deduction to the month of payment — so even one day's delay across a month boundary can mean two months' interest.

Section 201(1A), Income-tax Act — 1% p.m. for failure to deduct [201(1A)(i)]; 1.5% p.m. for failure to deposit after deduction [201(1A)(ii)].
Caution. The interest month is a calendar-month-of-deduction to month-of-deposit count, not 30-day periods. This tool counts the calendar months touched. ✓ Section 201(1A) rates: 1%/month (late deduction), 1.5%/month (late deposit). Verified June 2026. the exact month count for borderline dates.

Frequently asked questions

Is interest on TDS allowed as a business expense?

No. Interest under Section 201(1A) on late deduction or deposit of TDS is not deductible as business expenditure.

Does the 1.5% run from the date of deduction or the due date of deposit?

From the date of deduction to the date of actual deposit — not from the deposit due date. This is why delays are computed from the deduction month.

Is interest different under the Income-tax Act, 2025?

The interest mechanism for TDS defaults continues; map the relevant new-Act provision once notified. ✓ Section 201(1A): 1%/month late deduction, 1.5%/month late deposit. Verified June 2026.

Key takeaways

  • 1% p.m. for late deduction; 1.5% p.m. for late deposit.
  • Part of a month = full month (calendar-based).
  • Late-deposit interest runs from the date of deduction.
  • Section 201(1A) interest is not a deductible expense.
Related tools: TDS Rate Finder · 234A/B/C Interest Calculator

This content is for general guidance only and does not constitute professional advice. Tax law changes frequently — verify the current position and consult a qualified Chartered Accountant before acting. Last reviewed: June 2026.