TDS Interest Calculator — Late Deduction, Late Payment & Late Fee

Quick answer

If TDS is deducted late, interest is 1% per month from the date it should have been deducted till the date of actual deduction. If TDS is deposited late, interest is 1.5% per month from the date of deduction till the date of deposit. A part of a month counts as a full month. A TDS return filed after its due date also attracts a late fee of ₹200 per day, capped at the total TDS in that return.

How to use this TDS interest calculator

The calculator has four required fields and two optional ones. Enter dates exactly as they happened, not as you planned them.

1. TDS amount. The tax that was, or should have been, deducted on the payment. If you are checking several payments, calculate each one separately, because each has its own dates.
2. Date TDS should have been deducted. This is the date of payment or the date the amount was credited to the payee's account in your books, whichever was earlier.
3. Date TDS was actually deducted. If you deducted on time, enter the same date as above. If you enter an earlier date by mistake, the calculator treats it as on time.
4. Date TDS was deposited. The date the challan was paid. If this is before the deduction date, the calculator asks you to check the dates.
5. TDS return due date (optional). The due date of the quarterly return in which this TDS is reported.
6. Date return filed or will be filed (optional). Fill both optional dates to see the late filing fee.

The result shows interest for late deduction (with the number of months), interest for late deposit (with the number of months), the deposit due date the calculator used, the late return fee (with the number of days) and the total.

Reading the result

If everything was on time, the result says "No interest or fee". Otherwise it shows the total in the headline and a reminder to pay the interest with the TDS challan before filing the return. Each line in the breakdown names the number of months or days used, so you can match it against the department's intimation later. Keep a screenshot or note of the figures with your challan for the quarter.

If you do not yet know when you will file the return, enter a realistic future date in the last field. The fee grows by ₹200 for every extra day, so the earlier date you can manage, the lower the figure.

The three charges explained

Late TDS can cost you in three separate ways. They are worked out independently and added together.

Notice that the late deposit rate is higher than the late deduction rate, and it runs from the date of deduction, not from the 7th of the next month. So once you are past the deposit due date, the interest covers the whole period since deduction.

Short deduction counts too

Interest for late deduction is not only for cases where nothing was deducted. If you deducted at a lower rate than required, for example 1% instead of 2% on a contractor that is a firm, the shortfall is treated as TDS not deducted. Interest at 1% per month runs on the shortfall from the date it was deductible until you deduct it. Enter just the shortfall as the TDS amount in the calculator to work it out.

The cost stays with the deductor

Interest and the late fee are the deductor's own liability. They cannot be recovered from the payee by cutting their payment, and they are separate from the TDS itself, which still has to be deposited in full.

Deposit due dates the calculator uses

• TDS deducted in April to February: due by the 7th of the following month.
• TDS deducted in March: due by 30 April.

If the deposit date is on or before the due date, late deposit interest is nil.

Under the new Act

From tax year 2026-27, the Income-tax Act, 2025 renumbers the interest and fee provisions for TDS. This calculator uses the familiar section references and the rates shown above.

How the calculator counts months

Interest is charged for every month or part of a month. Even one day into a new month adds a full month's interest. The calculator counts months as follows:

• Late deduction: from the day after the date TDS was deductible up to the date of deduction.
• Late deposit: from the date of deduction up to the date of deposit, but only if the deposit was after the due date.

Each period is measured from the start date, and any leftover days are rounded up to a full month. For example, from 10 January to 15 March is two months and five days, which counts as three months.

A few sample periods, counted the way the calculator does:

Why the department's figure can differ

The department's TRACES system works out interest when it processes your TDS return, and its month counting can differ from this method by a month in some cases, especially when the period crosses a month-end. Treat the calculator's figure as a close estimate. If you receive a default intimation, compare the months in it with your own count and pay the figure in the intimation unless you can show it is wrong.

Worked examples

Example 1: deducted late and deposited late

A firm credited a contractor's bill on 15 May 2026 but deducted TDS of ₹50,000 only on 20 July 2026, and deposited it on 25 August 2026.

• Late deduction: 16 May to 20 July counts as 3 months. Interest = ₹50,000 × 1% × 3 = ₹1,500.
• Deposit due date: TDS deducted in July is due by 7 August 2026. The deposit on 25 August is late.
• Late deposit: 20 July to 25 August counts as 2 months. Interest = ₹50,000 × 1.5% × 2 = ₹1,500.
• Total interest = ₹1,500 + ₹1,500 = ₹3,000.

Had the firm deposited the TDS by 7 August, the late deposit interest would have been nil and the total only ₹1,500. Once deducted, depositing within the due date is the easiest saving available.

Example 2: deposited late and return filed late

A company deducted TDS of ₹1,20,000 on time on 10 January 2027 but deposited it only on 15 March 2027. The October–December return, due on 31 January 2027, was filed on 20 March 2027.

• Late deduction: nil, as TDS was deducted on time.
• Deposit due date: 7 February 2027. The deposit is late.
• Late deposit: 10 January to 15 March counts as 3 months. Interest = ₹1,20,000 × 1.5% × 3 = ₹5,400.
• Late fee: 31 January to 20 March 2027 is 48 days. Fee = ₹200 × 48 = ₹9,600, which is below the cap of ₹1,20,000.
• Total = ₹5,400 + ₹9,600 = ₹15,000.

Example 3: the March relief, and missing it

A business deducted TDS of ₹40,000 on 25 March 2027.

• If deposited on 28 April 2027: TDS deducted in March is due by 30 April, so there is no interest.
• If deposited on 28 May 2027: the deposit is late. 25 March to 28 May counts as 3 months. Interest = ₹40,000 × 1.5% × 3 = ₹1,800.

Missing the extended March date by a month costs three months of interest, because the period starts from the date of deduction.

Example 4: late fee hitting the cap

A small business deducted and deposited TDS of ₹8,000 on time, but filed the April–June return, due 31 July 2026, only on 15 October 2026.

• Interest: nil, as deduction and deposit were on time.
• Days late: 31 July to 15 October 2026 = 76 days. Fee before cap = ₹200 × 76 = ₹15,200.
• The fee cannot exceed the TDS in the return, so the fee is ₹8,000.

The cap protects small deductors, but the fee still equals the full TDS. Filing on time would have cost nothing.

Example 5: short deduction found later

A company credited a contracting firm's bill of ₹2,00,000 on 12 September 2026 and deducted TDS at 1% (₹2,000) instead of the correct 2% (₹4,000). It spotted the error and deducted the shortfall of ₹2,000 from a later payment on 20 December 2026, depositing it on 5 January 2027.

• Late deduction on the shortfall: 13 September to 20 December counts as 4 months. Interest = ₹2,000 × 1% × 4 = ₹80.
• Deposit: TDS deducted in December is due by 7 January 2027. The deposit on 5 January is on time, so no late deposit interest.
• Total interest = ₹80.

The amount is small, but if the error had stayed until TRACES processed the return, it would have come back as a default with more months of interest.

Many payments in one quarter

A business with several late deductions in a quarter has to work out interest payment by payment, because each one has its own credit date, deduction date and deposit date. The simplest way is a small sheet with one row per payment: TDS amount, date deductible, date deducted, date deposited, months late and interest. Use the calculator to check each row. Paying the total interest in one challan is fine, as long as it is linked to the right quarter's return.

Salary TDS

The same interest rules apply to TDS on salary reported in Form 24Q. Because the employer deducts monthly on an estimate of the employee's yearly tax, small differences are usually adjusted in later months of the same year. What must never slip is the monthly deposit: salary TDS deducted in a month is due by the 7th of the next month, like any other TDS.

TDS return due dates

The late fee is worked out from the due date of the quarterly return. For non-salary TDS returns (Form 26Q) and salary TDS returns (Form 24Q), the due dates are:

For the one-time forms used by individuals, Form 26QB (property purchase) and Form 26QC (rent above ₹50,000 a month), the form is due within 30 days from the end of the month in which TDS was deducted. A late fee of ₹200 per day applies to these forms as well, subject to the same cap. If the department extends any due date by notification, use the extended date in the calculator.

Before you file a late TDS return

1. Deposit any TDS still pending for the quarter.
2. Work out late deduction and late deposit interest for each payment.
3. Calculate the late fee from the due date to the date you will actually file, and keep it within the cap.
4. Pay interest and fee through challans, entering them in the right boxes.
5. Check every payee's PAN and the challan details against your bank records.
6. File the return, then issue Form 16A to payees once it is processed.

How to pay the interest and fee

Interest and late fee are paid through the e-Pay Tax service on the income tax e-filing portal, using the TDS challan with your TAN.

1. Choose the correct assessment year, the TDS section and whether the payees are companies or non-companies.
2. Enter the TDS amount (if not yet paid), the interest and the fee in their separate boxes on the challan. Do not add interest into the tax box.
3. Pay and save the challan receipt with its BSR code, date and serial number.
4. In the TDS return for that quarter, show the challan and fill the interest and fee columns so that they are linked correctly.

Interest and the late fee should be paid before the TDS return is filed. A return filed without them is processed with a default, and you will get an intimation asking for the amount anyway.

Not sure how much TDS should have been deducted in the first place? Our TDS calculator shows the rate and limit for each type of payment.

Beyond interest: other consequences of late TDS

Interest and late fee are the most common costs, but delays can lead to more.

• Penalty for not filing the return. Apart from the daily fee, the department can impose a penalty of ₹10,000 to ₹1,00,000 for failing to file a TDS return or filing incorrect information. There is relief from this penalty in certain cases, for example when the TDS, interest and fee have been paid and the return is filed within one year of the due date.
• Disallowance of expense. For businesses and professionals, if TDS on a payment to a resident is not deducted or not deposited by the due date of filing your income tax return, 30% of that expense is disallowed in that year. It is allowed in the year the TDS is finally paid.
• Assessee in default. If you fail to deduct or deposit, you can be treated as an assessee in default and asked to pay the TDS amount itself, not only the interest.
• Prosecution in serious cases. Deducting TDS and keeping it instead of depositing is treated very seriously under the law. Never use deducted TDS as working capital.
• Unhappy payees. Until you deposit and file, the payee's TDS credit does not appear in their Form 26AS, which can block their refund or cause a demand.

Default notices from TRACES

When your TDS return is processed, TRACES checks the dates, rates, PANs and challans. If it finds short deduction, late deduction, late deposit or a late return, it sends an intimation showing the default amount. You can download a justification report from TRACES that shows, line by line, how each default was calculated.

How to respond

1. Download the intimation and the justification report.
2. Compare each default with your records. Use this calculator to check the interest for each line.
3. If the default is correct, pay the amount through a challan and tag the challan to the return by filing a correction statement.
4. If the default arises from a mistake in your return, such as a wrong date or wrong challan, file a correction statement to fix the data. The demand reduces once the correction is processed.
5. Check the status on TRACES after processing to confirm the default is cleared.

Many defaults turn out to be data errors rather than real delays: a challan entered with the wrong date, a challan tagged to the wrong quarter, or a deduction date typed incorrectly. Fixing the data through a correction statement removes such defaults without paying anything extra, so always check the justification report before paying.

Unpaid TDS defaults can also be adjusted against your own income tax refunds, so it is better to clear them promptly.

Common mistakes

• Counting interest from the 7th. Late deposit interest runs from the date of deduction, not from the deposit due date. Many people under-calculate by a full month or more.
• Using the payment date when the expense was credited earlier. TDS becomes deductible at credit or payment, whichever is earlier. If you booked the invoice in your accounts first, that date is the starting point.
• Ignoring the part month. Paying on the 8th instead of the 7th adds a month of interest. Two days' delay can mean two months' interest if the period crosses another month.
• Mixing interest into the TDS box. If interest is paid as TDS, the return shows it as tax and the interest stays unpaid as a default.
• Filing a nil-fee return late. A return with no TDS has no fee because the cap is the TDS amount, but returns with any TDS start the ₹200 per day clock immediately after the due date.
• One challan for all, with the wrong section. Each section and payee type should be paid correctly. Wrong codes create mismatches that look like short payment.
• Waiting for the intimation. Paying interest proactively before filing saves the effort of a correction later.

Practical habits that avoid interest

• Deduct when you book. Calculate TDS at the time you enter the invoice in your books, not later at payment.
• Pay by the 5th. Set a monthly reminder a couple of days before the 7th, so bank or portal issues do not push you past the due date.
• Track yearly limits per payee. Keep a simple payee-wise register, so you know when a payee crosses a limit and TDS starts.
• Collect PAN at onboarding. Get the payee's PAN with the first invoice to avoid higher-rate deductions and corrections.
• File returns in the first fortnight after the quarter. It leaves time to fix challan or PAN errors before the due date.
• Reconcile challans with books every month. Match each challan with the payments it covers, so the quarterly return can be prepared without hunting for details.
• Review TRACES regularly. Check for defaults after each return is processed and clear them while the details are fresh.

The TDS payee also benefits when you are on time: their credit shows up in Form 26AS sooner, and our AIS and 26AS guide explains how they use it while filing.

If you are the payee

Late TDS is the deductor's problem legally, but it affects you too. Until the deductor deposits the TDS and files the quarterly return, the credit does not show in your Form 26AS, and the system will not allow it when processing your income tax return.

• Check your Form 26AS and AIS a few weeks after each quarter's return due date, and compare with the Form 16A or the TDS amount shown on your payment advice.
• If TDS was cut from your payment but is missing, write to the deductor with the invoice number, amount and date, and ask them to deposit and file or correct the return.
• Do not claim a credit that is not in 26AS without a plan to get it there. The claim will be reduced during processing and may create a demand.
• If the deductor corrects the return after you have filed, your credit can be granted on reprocessing or through a rectification request.

Interest that the deductor pays for the delay goes to the government, not to you. Your remedy is to get the credit reflected, so follow up early.

When to take expert help

Use expert help when:

• several months or quarters of TDS are pending and you need to regularise them in one go;
• you have received TRACES intimations you do not fully understand, or the figures do not match your records;
• a TDS return was never filed, or was filed with wrong PANs or challans;
• you face a possible expense disallowance in your own income tax return because of unpaid TDS;
• you have received a penalty or show-cause notice relating to TDS.

For the first conversation, keep ready the list of payments with dates, the TDS deducted on each, challans paid, returns filed so far with their acknowledgement numbers, and any intimations from TRACES. With these, the interest, fee and correction steps can be worked out quickly and in the right order.

Our income tax filing service covers TDS deposits, returns, corrections and default resolution as well as income tax returns.

Get it checked by an expert

Behind on TDS or holding a TRACES default you cannot match? A TaxCaller expert can work out the exact interest and late fee for each payment, prepare the challans, file pending or correction returns and clear the defaults on TRACES. We tell you the fee upfront before starting any work, and the first call to review your situation is free. Keep your challans, TDS returns filed so far and any intimations ready for the call.