TDS late deduction & deposit
Interest and fee for deducting or depositing late
Worked example
Using the default values, tds late deduction & deposit gives a total interest and fee of ₹1,500.
| Item | Value |
|---|---|
| Rate | 1% a month |
| Months | 0 |
| Interest | ₹0 |
| Rate | 1.5% a month |
| Months | 2 |
| Interest | ₹1,500 |
| Rate | ₹200 a day |
| Days | 0 |
| Fee before cap | ₹0 |
| Capped at the TDS amount | ₹50,000 |
| Fee payable | ₹0 |
| Interest and fee | ₹1,500 |
| TDS plus everything | ₹51,500 |
What you need
- TDS amount
- Months late in deducting
- Months late in depositing
- Days late in filing the return
Questions
Why is late deposit charged more than late deduction?
Late deduction is 1% a month, late deposit 1.5%. Once you have deducted, the money is the government’s and you are holding it, which the law treats more seriously.
Is the ₹200 a day fee a penalty?
It is a fee under section 234E, not a penalty, so it cannot be waived for reasonable cause. It is capped at the TDS amount in the statement.
Important
Interest runs at 1% a month from the date the tax should have been deducted to the date it actually was, and at 1.5% a month from deduction to deposit. Part of a month counts as a whole month, so a single day late costs a full month. The ₹200 a day fee under 234E for filing the quarterly statement late cannot exceed the TDS in that statement. Failing to deduct at all can also mean 30% of the expense being disallowed under section 40(a)(ia), which is not modelled here.