Did you know even a one-day delay in depositing TDS can lead to penalties? Here's a complete guide on the interest applicable on late payment of TDS and how you can stay compliant.
Table of Contents
What is TDS?
TDS or Tax Deducted at Source is a tax collection mechanism where a portion of tax is deducted at the time of payment. This ensures the government gets tax revenue in advance. TDS is applicable on salaries, contractor payments, rent, commissions, and more.
TDS Payment Due Dates
Here are the standard deadlines:
- April to February: 7th of the following month
- March: 30th April
Missing these deadlines leads to interest and potential penalties.
Interest Rates on Late Payment
- 1% per month: If TDS is not deducted on time
- 1.5% per month: If deducted but not deposited
Even a delay of a single day is treated as a full month for interest calculation. This is governed by Section 201(1A) of the Income Tax Act.
Consequences of Delay
- Interest charges (as explained above)
- ₹200/day late filing fee under Section 234E
- Penalty of ₹10,000 to ₹1,00,000 under Section 271H
- Disallowance of expense in income tax computation
- Possible prosecution for serious defaults
FAQs
Summary
TDS is a crucial part of tax compliance in India. Missing deadlines can attract interest, late fees, and penalties. Stay alert, follow the due dates, and consult a professional if needed. At TaxItEazy, we simplify TDS management for individuals and businesses alike.
