Tds on salaried employees

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maruthi (Querist)
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26 February 2014 Dear Expert,
As Iam an Employer, I dont Deduct TDS on Employees Salary paid from the beginning, But at the end in the Month of Jan,Feb,& March now i deducted the TDs for the Whole Year.
What will be the Consequence,& is it can be do so Or do i need to file all the Qtr TDS return

Pls guide me on the above Query...

Thank You,

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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04 March 2014 As per Section 192, TDS on salary is required to be deducted at the time of payment. Further TDS is required to be deducted at an average rate.

So TDS on salary is required to be deducted every month.

maruthi

maruthi (Querist)
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04 March 2014 Thanks for your replay sir,

But now i dont deduct it every month but now can i deduct it at the end of the year and deposit to the Department, Is there any consequences and what is the penalty and interest for it

Thank you.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Here's a clear explanation for your situation about TDS on salary:

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### TDS on Salary & Timing of Deduction

* **Section 192** mandates that TDS on salary must be deducted **at the time of payment**, i.e., monthly when salary is paid.
* You **cannot defer deducting TDS on salary till the end of the financial year** and pay all at once for the whole year.
* TDS should be calculated on estimated annual income and deducted monthly on a **pro-rata basis**.

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### Consequences of Delayed TDS Deduction

1. **Interest Liability (Section 201(1A))**:

* You will be liable to pay **interest** for late deduction and late deposit of TDS.
* Interest is calculated as:

* **1% per month** (or part of the month) from the date when TDS was deductible to the date of actual deduction.
* **1.5% per month** (or part of the month) from the date of deduction to the date of actual deposit.

2. **Penalty**:

* The Income Tax Department may impose a **penalty** for failure to deduct or pay TDS timely.
* Penalty may be up to the amount of TDS not deducted or paid.

3. **Disallowance of Expenses**:

* Salaries paid without proper TDS deduction and deposit may not be allowed as deduction while computing income of the employer.

4. **Filing of Quarterly TDS Returns**:

* You **must file TDS returns for all quarters** for the year.
* Returns should reflect actual TDS deducted and deposited.
* If TDS was not deducted in earlier quarters, those returns will reflect no deduction, and this might trigger scrutiny.

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### What Can You Do Now?

* Immediately **deduct TDS for the pending months** and deposit the same with interest.
* File **TDS returns for all quarters** with accurate details.
* Issue **Form 16** to employees reflecting actual TDS deducted.
* Consider voluntary disclosure to tax authorities to avoid or minimize penalty.

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### Summary

| Point | Requirement |
| --------------------------- | -------------------------------------------- |
| Deduct TDS on salary | Monthly, at time of payment |
| Late deduction consequences | Interest + penalty possible |
| Deposit TDS | Within due dates (usually 7th of next month) |
| File TDS returns | Quarterly |
| Can you deduct TDS yearly? | No, not as per law |

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If you want, I can help you calculate the interest or draft a letter explaining this to your accounts team or tax consultant. Would you like that?

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