Question 1

Why does a part-month count as a full month?

Accepted Answer

Section 201(1A) charges interest for every 'month or part of a month'. Any day in a month triggers the full month, so 15-Jan to 20-Feb counts as two months.

Question 2

What is the difference between 1% and 1.5% interest?

Accepted Answer

1% per month applies from the date the amount was paid/credited to the date it was actually deducted. 1.5% per month applies from the date of deduction to the date of deposit with the government.

Question 3

What is the due date for depositing TDS deducted in March?

Accepted Answer

For non-government deductors, TDS deducted in March is due by 30 April. For other months, the due date is the 7th of the following month.

Question 4

Is this interest allowed as a business expense?

Accepted Answer

No. Interest paid under Section 201(1A) is expressly disallowed as a deduction while computing business income.

Question 5

How does this map to the Income-tax Act, 2025?

Accepted Answer

The interest machinery continues under the new Act. While TDS deduction sections such as 194C/194J/194I are consolidated under Section 393 for payments from 1 April 2026, the interest on late deduction/deposit under Section 201(1A) remains substantively the same.

TDS Interest Calculator — Section 201(1A)

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