1. What is TDS Interest?

TDS (Tax Deducted at Source) interest is charged when the deductor fails to deposit the TDS amount to the government within the prescribed due dates. The interest is calculated from the date when TDS was deducted to the actual date of payment.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( TDS \) — Tax Deducted at Source amount
• \( rate \) — Applicable interest rate (percentage)
• \( months \) — Number of months delayed

Explanation: The formula calculates simple interest on the TDS amount for the period of delay.

3. Importance of TDS Interest Calculation

Details: Accurate TDS interest calculation is crucial for compliance with tax laws, avoiding penalties, and maintaining proper financial records.

4. Using the Calculator

Tips: Enter the TDS amount in the base currency, the applicable interest rate percentage, and the number of months delayed. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the standard interest rate for late TDS payment?
A: The rate is typically 1% per month or part thereof under Section 201(1A) of the Income Tax Act.

Q2: Is this interest tax-deductible?
A: No, interest paid for late deposit of TDS is not deductible as an expense.

Q3: When does the interest calculation period start?
A: Interest is calculated from the date of deduction to the date of actual payment to the government.

Q4: Are there any penalties in addition to interest?
A: Yes, there may be additional penalties under Section 271C for failure to deduct or pay TDS.

Q5: Can this calculator be used for advance tax interest?
A: No, this is specifically for TDS interest. Advance tax interest has different calculation methods.