1. What is TDS Interest?

TDS (Tax Deducted at Source) interest is charged when the tax deducted is not deposited with the government by the due date. The current interest rate is 1.5% per month or part thereof for late payment.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• TDS Amount — The amount of tax deducted at source (in INR)
• 1.5% — Monthly interest rate for late payment
• Months Delayed — Number of months (or part thereof) the payment is delayed

Explanation: The interest is calculated from the date of deduction to the date of actual payment, rounded up to whole months.

3. Importance of TDS Interest Calculation

Details: Accurate interest calculation is crucial for compliance with tax laws and to avoid penalties. Underpayment may lead to additional charges during tax assessments.

4. Using the Calculator

Tips: Enter the TDS amount in INR and the number of months delayed (can be a decimal). The calculator will compute the interest payable at 1.5% per month.

5. Frequently Asked Questions (FAQ)

Q1: Is the interest rate always 1.5%?
A: Currently yes, but it's subject to change as per government notifications. Always check the latest rates.

Q2: How are partial months calculated?
A: Any part of a month is considered as a full month for interest calculation.

Q3: Is this interest tax-deductible?
A: No, interest paid for late deposit of TDS is not deductible under any provision of the Income Tax Act.

Q4: When does the interest calculation period start?
A: From the 7th of the following month (for monthly deposits) or from the due date applicable to your TDS payment.

Q5: Are there any penalties in addition to interest?
A: Yes, late payment may also attract penalties under Section 271H of the Income Tax Act.