TDS Due Dates and the Three Penalties Founders Confuse
TDS has three separate failure points — late deduction, late deposit, and late return — each with its own cost. Here's the deposit deadline, the quarterly return dates, and what each slip costs, with a worked example.
TDS has three separate things that can go wrong, each with its own penalty: late deduction, late deposit, and late return. TDS deducted must generally be deposited by the 7th of the following month, returns are filed quarterly, and missing each step has a distinct cost — interest under Section 201 for deduction/deposit failures, and a ₹200/day fee under Section 234E for a late return. Founders routinely confuse the three; here's each one, clearly.
The three failure points
1. Late (or non-) deduction
If you were required to deduct TDS and didn't, or deducted late, Section 201(1A) charges 1% per month from when it should have been deducted until it is. Non-deduction can also disallow 30% of the related expense for income tax.
2. Late deposit
TDS deducted but deposited late attracts 1.5% per month under Section 201(1A), from deduction to deposit. The deposit is generally due by the 7th of the following month (with the March deduction having its own date).
3. Late return
TDS returns are quarterly (Form 24Q for salary, 26Q for other resident payments, 27Q for non-residents). File late and Section 234E levies ₹200/day until filed, capped at the TDS amount — plus possible penalties.
A worked example
You deduct ₹50,000 TDS in April but deposit it 20 days late and file the quarterly return 10 days late:
- Late-deposit interest: 1.5% × ₹50,000 × 1 month (part-month counts) = ₹750
- Late-return fee: ₹200 × 10 = ₹2,000
- Total: ₹2,750 — for one month's slip on one deduction.
The point: the three costs stack, and the ₹200/day return fee adds up fast.
Why founders confuse them
Because "TDS" feels like one task, founders assume depositing it covers everything. It doesn't — deducting, depositing, and filing the return are three obligations with three deadlines and three penalties. Getting the deposit right but the return late still costs ₹200/day.
Track all three, with proof
ComplianceStack tracks the monthly TDS deposit and the quarterly returns as separate dated tasks, and stores the challans and filed returns as evidence. Run the numbers anytime with the TDS interest calculator. Get your free compliance health check.
General information, not tax advice. TDS rates, sections and dates change by notification — confirm with your CA.
FAQs
- What is the TDS deposit due date?
- Generally the 7th of the month following deduction (March has its own date). Late deposit attracts 1.5% per month under Section 201(1A).
- What are the three TDS penalties?
- Late deduction (1% per month, Section 201), late deposit (1.5% per month, Section 201), and late return (₹200/day under Section 234E, capped at the TDS amount).
- When are TDS returns due?
- Quarterly — Form 24Q (salary), 26Q (other resident payments), 27Q (non-residents), each with a prescribed quarterly deadline.
This article is general information, not tax, legal or accounting advice. Statutory timelines and thresholds change by notification — confirm applicability and interpretation with your CA, CS, or lawyer before acting.
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