Under the transition to the Income Tax Act, 2025, the fundamental interest rates for late TDS payments remain consistent with the previous regime, though the statutory section numbering has been updated (now primarily governed under Section 393).

The following rates apply for the Financial Year 2025-26 (Assessment Year 2026-27):

1. Interest Rates for Delayed TDS

Interest is calculated as Simple Interest on a “per month or part of a month” basis.

Note: “Part of a month” is treated as a full month. For example, a delay of even 1 day beyond a month results in an additional month’s interest.

 

2. Late Filing Fee (Section 234E)

If you fail to file your quarterly TDS return (Statement) by the due date:

• Fee: ₹200 per day of delay.

• Limit: The total late fee cannot exceed the total amount of TDS deductible for that quarter.

3. Example Calculation

Assume you deducted ₹10,000 as TDS on April 15, 2025. The due date to deposit this was May 7, 2025. If you deposited it on June 10, 2025:

1. Deduction Month: April

2. Payment Month: June

3. Months for Interest: April (part), May (full), June (part) = 3 Months.

4. Calculation: $₹10,000 \times 1.5\% \times 3 = ₹450$.

4. Transition to Income Tax Act 2025

• Effective Date: The new Act applies to payments or credits occurring on or after April 1, 2026.

• Policy Continuity: While the section numbers have changed to a simplified tabular format, the interest rates (1% and 1.5%) and thresholds remain unchanged to ensure a smooth transition for taxpayers.

   

• Reporting: For transactions after April 1, 2026, ensure you use the new section codes (e.g., Section 393) in your returns to avoid system validation errors.

Are you calculating interest for a specific payment, or do you need the due date calendar for the upcoming quarters?

for more refer income tax website click here

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

video HOW TO PAY TDS ON PROPERTY PURCHASE FROM 1ST APRIL 2026 I HOW TO FILE FORM141 INCOME TAX RULES 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.

Section 393(1) Table Sr no 6 Income Tax Act 2025 Payments to contractors, fees for professional and technical services, etc

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

Form 141 Income Tax Rules 2026 pdf download (Earlier Form 26QB/26QC/26QD/26QD/26QR) New Income Tax Rules 2026

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,

for more refer income tax website click here