TDS Late payment interest from 1st April 2026 New Income Tax Rules 2026
Under the new Income-tax Act, 2025, which comes into effect on April 1, 2026, there is no change in the interest rates for the delayed deduction or deposit of Tax Deducted at Source (TDS). The penal interest provisions are governed by Section 398(3)(a) of the new Act and are structured based on the type of default:
- For Late Deduction: If you fail to deduct the required TDS at the time of payment or credit, an interest rate of 1% per month (or part of a month) will be levied. This interest is calculated from the date the tax was supposed to be deducted up to the date it is actually deducted.
- For Late Deposit (Late Payment): If you have deducted the TDS but fail to deposit it to the Government account by the specified due date, an interest rate of 1.5% per month (or part of a month) will be levied. This interest is calculated from the date the tax was deducted up to the actual date of payment to the Government.
Important Points to Note:
- Part of a Month: Any fraction or part of a month during which the delay continues is considered a full month for the purpose of calculating the interest.
- Pre-requisite for Filing: The accumulated interest for the delayed deposit must be paid before you can furnish your quarterly TDS statement/return.
TDS late payment interest rate for fy 2025 26,
- Transitional Period Defaults: If a transaction spans the transition period—for example, if tax was deducted in March 2026 under the old Act but you delay the deposit until May 2026—it will still attract the 1.5% per month late payment interest calculated from the original date of deduction.
How to calculate tds late payment interest,
how to calculate tds late payment interest If TDS deucted of Rs 10000 on 2nd April 2026 but deposited on 5th june 2026
To calculate the TDS late payment interest, we must apply the rules under Section 398(3)(a)(ii) of the new Income-tax Act, 2025.
If you deduct TDS but fail to deposit it to the Government account by the specified due date, an interest rate of 1.5% per month (or part of a month) is levied. Crucially, this interest is calculated from the date the tax was actually deducted up to the actual date of payment, not from the due date.
Here is the step-by-step calculation for your scenario:
1. Identify Key Dates & Amounts:
- TDS Amount: Rs. 10,000
- Date of Deduction: 2nd April 2026
- Due Date of Deposit: 7th May 2026 (Under the new Act, April deductions must be deposited by the 7th of the following month).
- Actual Date of Deposit: 5th June 2026
Since the deposit was made after the 7th May due date, late payment interest is applicable from the date of deduction (2nd April).
2. Calculate the Number of Months: Any fraction or part of a month during which the delay continues is considered a full month.
- 2nd April to 1st May = 1 Month
- 2nd May to 1st June = 2 Months
- 2nd June to 5th June = Part of a month (Counted as 1 full month)
- Total Time: 3 Months
3. Apply the Formula:
- Formula: TDS Amount × 1.5% × Number of Months
- Calculation: Rs. 10,000 × 1.5% × 3
- Total Interest: Rs. 450
Therefore, you will be required to pay a total of Rs. 450 as late payment interest for this delayed deposit. This accumulated interest must be paid before you can furnish your quarterly TDS statement/return.
Related Post
TCS Rates FY 2026 27 under Income Tax Act 2025 from 1st April 2026
TDS Rates FY 2026 27 under Income Tax Act 2025 from 1st April 2026
TDS on Rent w.e.f 01.4.2026 as per New Income Tax Rules 2026
TDS on Commission w.e.f 01.4.2026 as per New Income Tax Rules 2026
TDS on Professionals w.e.f 01.4.2026 as per New Income Tax Rules 2026
TDS on Contractors w.e.f 01.4.2026 as per New Income Tax Rules 2026
New Change for TDS on Property purchased from NRI from 1st April 2026
TDS payment due date for march 2026
Whether Section 395(1) applicable : Meaning under income tax Act 2025 for TDS
TDS on Fixed Deposits from 1st April 2026 : How to Save Tax on FD Interest
Section 393 Income Tax Act 2025 Tax to be deducted at source.
Section 394 Income Tax Act 2025 Collection of tax at source.
TDS Return
TDS return filing online Step by Step Guide
TDS return filing online new forms as per income Tax rules 2026 and applicability
Form 121 Income Tax pdf download (Earlier Form 15G/ 15H) New Income Tax Rules 2026
How to fill form 121 Income Tax Act 2025
Form 130 Income Tax Rules 2026 pdf download New Salary TDS Certificate Form
Your Queries Solved
TDS Late payment interest,
TDS Late payment interest,
tds late payment interest calculator,
tds late payment interest per day,
tds late payment interest per month,
tds late payment interest calculator excel,
tds interest rate,
how to calculate interest on tds late payment,
tds late payment interest,
tds late payment interest calculator,
tds late payment interest rate,
tds late payment interest and penalty,
tds late payment interest calculator excel,
tds late payment interest rate calculator,
tds late payment interest section,
tds late payment interest calculator online,
how to calculate tds late payment interest,
salary tds late payment interest,
tds challan late payment interest,
tds on property purchase late payment interest calculator,
tds challan late payment interest calculator,
tds challan late payment interest rate,
tds on property late payment interest calculator,
tds on purchase of property late payment interest,
tds on property late payment interest,
tds on property sale late payment interest,
property tds late payment interest,