Penalty for Late Filing of TDS Return – TDS Interest Calculator
Tax Deducted at Source (TDS) is an essential tax collection mechanism in India that ensures tax is deducted at the source of income and remitted to the government. Timely payment of TDS is crucial to avoid penalties and interest charges imposed under the Income Tax Act of 1961. In this article, we explore the consequences of late payment of TDS, including interest rates, penalties, and compliance requirements.
Understanding TDS and Its Importance
TDS is a tax deduction system where the payer (deductor) withholds tax from payments such as salaries, rent, professional fees, and contractor payments. The deducted amount must be deposited with the government within the specified due dates. Failure to comply with TDS regulations can lead to interest charges, penalties, and legal consequences.
TDS Due Dates for Remittance
To avoid penalties and interest, TDS must be remitted within the following deadlines:
- For April to February deductions – 7th of the following month.
- For March deductions – April 30th.
Late remittance attracts interest charges under Section 201(1A) of the Income Tax Act.
Interest on Late Payment of TDS
Interest is charged under two scenarios:
- Late Deduction of TDS: If TDS is not deducted on time, interest is levied at 1% per month or part of a month from the due date of deduction until the actual deduction.
- Late Payment of TDS: If TDS is deducted but not deposited on time, interest is charged at 1.5% per month or part of a month from the deduction date to the deposit date.
Example Calculation
If ₹10,000 TDS was deducted on April 7th but deposited on June 20th (a delay of 3 months):
- Interest = ₹10,000 × 1.5% × 3 = ₹450
Penalty for Late Filing of TDS Return
Apart from interest on delayed TDS payments, penalties apply for failing to file TDS returns within the prescribed due dates.
TDS Return Due Dates
| Quarter | Months Covered | Due Date |
|---|---|---|
| Q1 | April – June | 31st July |
| Q2 | July – September | 31st October |
| Q3 | October – December | 31st January |
| Q4 | January – March | 31st May |
Penalties for Non-Compliance
- Late Filing Fee (Section 234E):
- ₹200 per day of delay until the fee equals the TDS amount.
- Penalty for Non-Filing or Incorrect Filing (Section 271H):
- A fine ranging from ₹10,000 to ₹1,00,000 for failure to file or incorrect TDS returns.
- Additional to late filing fees and interest.
- Prosecution for Non-Payment of TDS:
- In extreme cases, rigorous imprisonment from 3 months to 7 years, along with a fine.
TDS Return Late Payment Intimation
The Income Tax Department may issue a TDS return late payment intimation under Section 234E and interest charges under Section 201(1A). This notice informs the deductor about delays in TDS compliance and demands timely resolution.
Conclusion
Timely deduction, payment, and filing of TDS returns Online are essential to avoid hefty penalties, interest charges, and legal repercussions. Businesses and taxpayers should ensure strict compliance with TDS rules to prevent financial and legal complications. Seeking professional assistance for TDS compliance can help manage obligations efficiently, ensuring smooth business operations.
