Penalties Section 201(1A) — Interest for TDS Deducted But Not Deposited (or Not Deducted)
Section 201(1A) — Interest for TDS Deducted But Not Deposited (or Not Deducted)
Income Tax Act 1961 — 201(1A)
1% per month (or part) where TDS was not deducted; 1.5% per month where TDS was deducted but not deposited by the due date.
The Penalty
1% per month (non-deduction) / 1.5% per month (deduction but non-deposit)
- Cap
- None stated
- Calculation base
- Amount of tax that should have been deducted / that was deducted
- Period
- From date TDS should have been deducted / was deducted, till date of actual deduction / deposit
When does this apply?
Failure to deduct TDS OR failure to deposit deducted TDS by the applicable challan due date
Calculate this amount
This estimate applies only the rate and caps published in the authored rule for this page.
₹2,000₹1,00,000 × 1% × 2 months
Worked examples
| Scenario | Calculation | Result |
|---|---|---|
| Deducted 15 Apr, deposited 15 Jun (2 months) — TDS ₹1,00,000 | ₹1,00,000 × 1.5% × 2 = ₹3,000 | ₹3,000 |
| Not deducted for 3 months — should-have-deducted ₹50,000 | ₹50,000 × 1% × 3 = ₹1,500 | ₹1,500 |
| Deducted 7 May but never deposited — count months up to actual deposit; here 4 months on ₹80,000 | ₹80,000 × 1.5% × 4 = ₹4,800 | ₹4,800 |
How it is levied
Payer is treated as an assessee-in-default under s.201(1). Interest under s.201(1A) is auto-computed on the TRACES portal against the deductor. Distinct from penalty under s.271C.
⚠ VERIFY
The 1.5% p.m. rate for late deposit and the 1% p.m. rate for non-deduction are the standing rates. Confirm no interim reduction has been notified for a particular quarter before advising.