TDS Payment Due Date

TDS payment due date is prescribed by the Income Tax Department to ensure that TDS is deducted regularly and paid to the credit of the Central Government post deduction. Since, a TDS deduction is an amount deducted from an amount payable to another taxpayer the adherence of TDS provisions is imperative. Hence, the Income Tax Department has imposed interest, penalty, disallowance of expenses, and prosecution for every default.

TDS Payment Due Dates

Month of Deduction	TDS Payment Due Date for all Types of deductors including Government Deductors
April	7th May
May	7th June
June	7th July
July	7th August
August	7th September
September	7th October
October	7th November
November	7th December
December	7th Jan
January	7th Feb
February	7th March
March	30th April (Non-Government Deductors)7th April (Government Deductors, Where tax is paid accompanied by an income-tax challan)Same Day (Government Deductors, Where tax is paid without production of an income-tax challan)

Mode of Payment of TDS

TDS must be deposited to the credit of the Central Government in any of the following ways:

1. E-Payment – Electronic payment is mandatory for all the corporate assesses and assesses on whom provisions presumptive taxation is applicable.
2. Physical Mode – By submitting Challan No. 281 in the authorised bank branch assesses can pay through a physical mode of payment.

Consequences on Default of Payment of TDS

The TDS payment due date must be followed by every assessee. A delay or default in payment of TDS would result in severe consequences of expense disallowances, penalty, prosecution, and interest.

Disallowance of Expenditure

Sum Payable To	Applicability	Disallowance	Condition
Resident (Any Amount)	Which is subject to deduction of tax at source	30% of the amount paid	If the sum is paid without deduction of tax at the sourceif tax is deducted but is not deposited with the Central Government till the due date of filing of return
Non-resident or outside India (Any sum other than salary)	Which is chargeable to tax in India in the hands of the recipient	Total amount paid	If the sum is paid without deduction of tax at the sourceIf tax is deducted but is not deposited with the Central Government till the due date of filing of return
If tax is deducted or deposited in the subsequent year then the expenditure shall be allowed as deduction in that year.

Interest on Default in TDS Deduction

If an assessee fails to deduct TDS or after deducting TDS fails to deposit TDS to the credit of the Central Government then the assessee is deemed as assessee-in-default. Such an assessee will be liable to pay interest over delay or default in TDS payment due date as per the following conditions

Type of Default	Rate of Interest	Period For Which Interest is To Be Paid
If a deductor fails to deduct tax at the source	1% for every month or part of a month on the amount of such tax	From the date on which such tax was deductible to the date on which such tax is deducted
After the deducting, the same fails to deposit it to the account of the Central Government	1.50% for every month or part of a month on the amount of such tax	From the date on which such tax was deducted to the date on which such tax is actually paid.

Levy of Penalty

Under section 271C, the penalty could be of an amount equal to the TDS not deducted. The penalty shall be charged under section 221 if the deductor fails to deduct and pay tax to the credit of the Central Government. The penalty shall be charged as per the direction of the assessing officer. Further, the amount of penalty levied cannot exceed the amount of tax in arrears.

Prosecution

If an assessee fails to pay to the credit of the Central Government the tax deducted at source by the assessee then prosecution shall be initiated. The rigorous imprisonment shall be for a term not less than three months but not extending to seven years and with a fine.

How is Interest on Late Payment of TDS Calculated?

Failure To Deduct Tax At Source

An assessee was supposed to deduct TDS of the amount of Rs 10,000 in the month of April 2020. Here the assessee was supposed to pay the TDS to the credit of the Central Government by 7th May 2020. He fails to deduct and pay the TDS by 7th May 2020. He actually deducts TDS on 15th August 2020. 

Here, the assessee makes default in deduction of TDS and is liable for payment of interest. The interest will be 1% for every month or part of a month on the amount of such tax. The interest shall be paid from the date on which such tax was deductible to the date on which such tax is deducted

Calculation of Interest

Amount of TDS = Rs 10,000

Rate of Interest = 1%

Number of Months of Delay = 5 months (From April till August)

Amount of Interest = Rs 500 (Rs 10,000 * 1% * 5 months)

Failure To Pay To Central Government

An assessee was supposed to deduct TDS of the amount of Rs 30,000 in the month of January 2020. Here the assessee was supposed to pay the TDS to the credit of the Central Government by 7th February 2020. He deducted the TDS on 10th January 2020. However, he fails to pay the TDS by 7th February 2020. He actually pays TDS on 15th December 2020 to the credit of the Central Government.

Here,  the assessee makes a default in payment of TDS and is liable for payment of interest. The interest will be 1.5% for every month or part of a month on the amount of such tax. The interest shall be paid from the date on which such tax was deductible to the date on which such tax is deducted

Calculation of Interest

Amount of TDS = Rs 10,000

Rate of Interest = 1.5%

Number of Months of Delay = 12 months (From January till December)

Amount of Interest = Rs 5400 (Rs 30,000 * 1.5% * 12 months)

Assessee-in-Default Exception

An assessee who fails to deduct TDS or pay TDS to the credit of the Central Government is deemed to be an assessee in default. However, the provision has an exception as well. An assessee will not be treated as an assessee in default on fulfilling all of the following conditions:

1. Assessee has furnished his/ her return of income under section 139​;
2. The assessee has taken into account such a sum for computing income in the return of income. Such sum is the amount on which TDS was supposed to be deducted.
3. Assessee has paid the tax due on the income declared by him/ her in such return of income. Further, the deductor furnishes a certificate to this effect in Form No.26A from a Chartered Accountant.

Deduction of TDS While Paying Government

Any person paying any interest income or dividend to the following entities need not deduct TDS. Such interest or dividend is in respect of any securities or shares owned by it or in which it has a full beneficial interest, or any other income accruing or arising to it.

1. The Central Government, or State Government
2. The Reserve Bank of India, or
3. A corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income tax on its income, or
4. A Mutual Fund specified under clause (23D) of section 10.

Learn How to File TDS Return?

Frequently Asked Questions

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