TDS Late Deduction Interest Calculator
Regarding TDS (Tax Deducted at Source) in India, timely deduction and deposit are crucial to avoid penalties. If TDS is deducted late, the Income Tax Department imposes interest @ 1% per month under Section 201(1A) of the Income Tax Act, 1961 from the date the tax was deductible to the date it is deducted. Interest will be applied even if there is a delay of one day and in the calculation of the interest, the part of the month is considered a full month for interest computation.
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Legal Provisions related to TDS Late Deduction Interest
When Tax Deducted at Source (TDS) is not deducted on time, the deductor is liable to pay interest as stipulated under Section 201(1A) of the Income Tax Act, 1961. Here are the crucial details:
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Interest Rate: The interest rate for late deduction of TDS is 1% per month or part thereof.
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Calculation Period: Interest is calculated from the date the TDS was due to be deducted until the actual deduction date.
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Full Month Rule: Even a single day’s delay is treated as a full month for interest calculation.
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Compliance Necessity: Timely deduction of TDS is essential to avoid this interest and ensure adherence to tax regulations.
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