TDS Return Filing Guide

If you deduct tax at source — on salaries, contractor payments, rent or professional fees — you also have to report it. TDS return filing is where many businesses slip, because the late fee runs per day and is easy to trigger. Here is the cycle, kept simple.

Quick answer

A TDS return is the quarterly statement a deductor files reporting what was deducted, from whom, and against which challan. A deductor needs a TAN and files 24Q for salary, 26Q for other resident payments, 27Q for non-residents and 27EQ for TCS — after each quarter, by 31 July, 31 October, 31 January and 31 May. Deposit the tax by the 7th of the following month, then file, then issue Form 16 or 16A.

Who this is for

Anyone whose TAN is on a challan. That is a wider group than people expect: employers running payroll, companies paying rent or professional fees, LLPs paying contractors, and — under a separate route with no TAN at all — individuals buying property or paying large rent.

If you have never deducted before and are working out whether you must, start with the TAN registration guide. If you are already deducting and want the return cycle right, keep reading.

What a TDS return is

A TDS return is a quarterly statement of the tax you deducted and deposited, who you deducted it from, and against which PAN. It is what lets the deductee see the credit in their Form 26AS and claim it in their own return. Depositing the tax is only half the job; the return is what allocates the credit.

That allocation point is the whole reason the statement exists, and it is worth being blunt about the consequence. If you deduct ₹50,000 from a consultant and deposit it on time but never file the statement — or file it with the wrong PAN — the government has the money and the consultant cannot claim it. From their side it looks like theft. From the department's side you are in default. The deposit alone proves nothing about whose tax it was.

The statement carries four things the system reconciles against each other: the challan (BSR code, date of deposit, serial number), the deductee (PAN, amount paid, amount deducted), the section under which you deducted, and the period. Break any one of those four and the credit does not land.

Which Act applies to your deduction

Since 1 April 2026 there are two rulebooks in circulation, and which one applies to a given payment is decided by a single test.

The earlier of credit or payment decides. If that earlier event fell on or before 31 March 2026, the Income-tax Act, 1961 applies. If it fell on or after 1 April 2026, the Income-tax Act, 2025 applies. The Income Tax Department's worked examples make the edge cases clear:

• Professional fees credited in March 2026 but paid in April 2026 — 1961 Act, and the tax had to be deducted in March.
• An advance paid in March 2026 but credited in April 2026 — also the 1961 Act, for the same reason.
• A monthly housekeeping contract — March credit under section 194C, April credit under section 393(1) Table Sl. No. 6(i). No contract amendment is needed; the deductor simply applies the provision in force on the date of the earlier event.
• Salary is different: tax on salary is deducted at the time of payment, so March-2026 salary paid on 31 March 2026 is section 192, and April-2026 salary paid on 30 April 2026 is section 392(1).

Two consequences that catch people out. Corrections to old quarters are still filed in the old format under the old Act, even after 1 April 2026. And employers have to reset the salary TDS computation from 1 April 2026 for the new tax year, with fresh projected income and a fresh regime election.

The rates have not changed. The department states that the rates and monetary thresholds for all categories of payment have been retained. What changed is the citation — and it changed enough to matter operationally, because quoting the old section number on a post-April payment "may lead to processing errors at the time of filing the TDS return", after which you are filing a correction statement to fix nothing more than a reference.

The section map

Under the Income-tax Act, 2025 the whole of the old 192-to-194T range is reorganised into a small number of sections, most of them tables.

Note the shape of it. Section 393 is not "TDS" — it is deduction from payments other than salary. Salary sits in section 392 and collection at source in section 394. Describing section 393 as if it swallowed the whole chapter is the fastest way to file a salary statement under the wrong provision.

Within section 393 the practical unit is the table row, not the section. A contractor payment is section 393(1) Table Sl. No. 6(i); commission or brokerage is Sl. No. 1(ii); professional fees are Sl. No. 6(iii). The department's own guidance uses the old 194-series label conversationally while citing the new row formally — which is a reasonable house style to copy: lead with the row, keep the familiar label in brackets.

TAN and deducting correctly

Before you can deduct, you need a Tax Deduction and Collection Account Number (TAN), quoted on every challan and return. Deduct at the correct rate for the section involved, apply the higher rate where the payee has no PAN, and deposit the tax by the monthly due date. Getting the section and rate right at deduction avoids corrections later.

Two conditions sit upstream of the rate and are easy to miss.

Are you a "specified person"? Several rows — rent, commission, professional and technical fees — only bite where the payer is a specified person. That means any person other than an individual or HUF, or an individual or HUF whose turnover exceeded ₹1 crore in business or ₹50 lakh in profession in the immediately preceding year. A company is always a specified person. A small sole proprietor below those turnover limits is not, and deducts under a different, narrower row instead.

Is the threshold a cliff or a slice? For almost every row it is a cliff: once the aggregate in the year crosses the threshold, tax is deducted on the entire amount, not just the excess. The purchase-of-goods row is the exception — there, tax applies only to the sum above ₹50 lakh. Treating that exception as the general rule under-deducts everywhere else; treating the general rule as universal over-deducts on goods by a wide margin. If you want to sanity-check a specific payment before you release it, the TDS calculator works it through section by section.

If the payee holds a lower or nil deduction certificate — now issued under section 395(1), on an application in Form 128 under the Income Tax Rules, 2026 — you deduct at the rate on the certificate for as long as it is valid, and you need the certificate on file to defend that rate later. A certificate issued under the old section 197 stays valid for payments on or after 1 April 2026 where it was granted for projected receivables of tax year 2026-27.

When you do not need a TAN at all

There is a whole class of deduction obligations that lands on people who have never run payroll. Three of them are expressly exempt from the TAN requirement, and they use a challan-cum-statement instead of a quarterly return.

Under the Income Tax Rules, 2026 these four old challan-cum-statement forms — 26QB, 26QC, 26QD and 26QE — are replaced by a single common form, Form No. 141, for transactions where credit or payment falls on or after 1 April 2026. Transactions up to 31 March 2026 continue on the old forms.

The rent row is the one people get wrong most reliably. The threshold is per month or part of a month, not annual, and the deduction is made once — against the last month's rent — rather than every month. Miss it and you are the defaulter, TAN or no TAN.

No PAN: what actually happens

Where a deductee does not furnish a valid PAN, you deduct at the higher of:

• the rate specified in the relevant provision, or
• the rates in force, or
• 5% where the deduction is on purchase of goods or on e-commerce payments, and 20% in every other case.

So the floor is not a flat 20%. On a purchase-of-goods deduction the floor is 5%, and applying 20% there over-deducts by four times — money you then have to explain to a supplier who cannot claim it either. On commission, professional fees, contractor payments and rent the floor is 20%, and applying the ordinary rate under-deducts.

One further guard rail: where rent is deducted at the no-PAN rate, the deduction cannot exceed the rent payable for the last month of the tax year or of the tenancy. Without it, a 20% rate against an annual rent could exceed the final month's payment entirely.

A payee who wants no deduction at all because their income will be below the taxable limit files a declaration — the old Forms 15G and 15H, now merged into a single Form No. 121 for tax years beginning on or after 1 April 2026, with one UIN per PAN per tax year instead of a separate UIN for every payer. If the declarant has no valid PAN the declaration is invalid and you must deduct at the no-PAN rate anyway.

Depositing the tax

The deposit is a separate obligation from the statement, on a separate clock, with separate consequences.

The department confirms that the Income Tax Rules, 2026 retain these timelines without policy change. Deposit late and interest runs at 1.5% per month or part of a month from the date of deduction to the date of actual payment — "part of a month" meaning a single day's delay across a month boundary costs a full month's interest. Fail to deduct at all and the interest is 1% per month from the date the tax was deductible to the date it is finally deducted.

The quarterly cycle

You file one return per quarter, by form:

• Form 24Q for TDS on salaries.
• Form 26Q for TDS on most other resident payments.
• Form 27Q for payments to non-residents.

Returns are due in the month following each quarter, with the last quarter usually allowed a little longer.

Two working notes. 27EQ, the TCS statement, is due on the 15th, not the month-end — a fortnight earlier than the TDS statement for the same quarter, which is a genuinely easy date to miss if you file both. And the Q4 statement gets two extra months precisely because it carries the annual salary detail that Form 16 is built from.

One honest caveat for tax year 2026-27. From 1 April 2026 the statement is delivered under section 397(3)(b), and the period, form and timing are whatever the Income Tax Rules, 2026 prescribe. As at 19 August 2026 the department had published the new form numbers for several other filings but not for the quarterly statement, and had not published a notified quarterly due date under the new rules. The quarterly rhythm above is the established one and the department's stated position is that the framework is unchanged — but confirm the notified date and the form number on the portal before you file your first statement of the new tax year. Do not take a number from a source that cannot show you where it came from.

Form 16 and Form 16A

After filing, you issue certificates. Form 16 is the annual salary TDS certificate for employees; Form 16A is the quarterly certificate for non-salary TDS. These are generated from the filed return, so a correct, timely return is what lets you issue correct certificates.

The mechanics behind that sentence matter:

• Form 16 is due 15 June following the financial year. Part A is generated from Annexure I of your fourth-quarter 24Q, and Annexure II — the full-year salary breakup — is mandatory in that Q4 statement. Skip Annexure II and you cannot produce a complete Form 16, however carefully you filed the other three quarters.
• Form 16A is quarterly, due about a fortnight after the statement: 15 August, 15 November, 15 February and 15 June.
• Form 16B and Form 16C — the property and rent certificates — are due within 15 days of filing the corresponding challan-cum-statement.
• Form 27D is the TCS certificate, on its own quarterly dates.
• Certificates are downloaded from TRACES and authenticated before issue. A hand-typed certificate is not a valid one.

Failing to issue a certificate is its own default, at ₹500 per day of delay under section 272A(2)(g) for FY 2025-26 — separate from anything owed on the statement itself.

Worked example: one quarter of vendor payments

Assumptions. A private limited company, so a specified person. All amounts credited during the quarter ended 30 June 2026, so the Income-tax Act, 2025 applies. All deductees have valid PANs. No lower-deduction certificates.

Every one of these clears its threshold — ₹50,000 for professional fees, ₹20,000 for commission, ₹50,000 a month for rent — so tax comes off the whole amount in each case, not just the excess.

The April deductions are deposited by 7 May, May's by 7 June, June's by 7 July. All three heads appear in one Form 26Q for the quarter, filed by 31 July 2026, with Form 16A issued to each vendor by 15 August 2026.

Now file it on 20 August instead. The fee under section 427 runs at ₹200 a day for 20 days — ₹4,000. It is capped at the tax in the statement, which is ₹40,000, so the cap gives no relief. The fee has to be paid before the statement can be delivered, so it is not a bill that arrives later; it is a precondition to filing at all. And because the statement is more than a fortnight late, the Form 16A certificates are late too, exposing you to the ₹500-a-day certificate default on top.

Change one assumption — the consultant has no PAN — and the professional-fee deduction goes to 20%, or ₹40,000 instead of ₹20,000, taking the quarter's TDS to ₹60,000. That is not a penalty; it is simply the rate, and it is your liability to deduct correctly, not the consultant's to remember.

What it costs

There is no government fee to file a TDS statement. Everything below that is payable to the department is either tax you already hold on someone else's behalf, or a consequence of a missed step.

Keep those columns apart when you are comparing quotes. The government amounts above are not a service's revenue and should never be bundled into one "all-inclusive" figure — a firm that cannot show you which line is a statutory fee and which is theirs is not quoting you a price. Our TDS return filing service prices per return per quarter and shows the statutory amounts separately.

Common mistakes

• Depositing on time but filing the statement late. The government already has the money, and the ₹200-a-day fee runs anyway.
• Quoting 194C, 194H or 194J on a payment made on or after 1 April 2026 instead of the section 393 table row — a validation error that turns into a correction statement.
• Applying a flat 20% for a missing PAN. The floor is 5% on purchase of goods and e-commerce payments.
• Deducting on the whole amount for purchase of goods, where only the sum above ₹50 lakh is charged.
• Treating the rent threshold as annual. It is ₹50,000 for a month or part of a month.
• Wrong or structurally invalid deductee PANs, which mean the credit never reaches anyone.
• A challan that does not match the statement — a wrong BSR code, date or serial number, or a challan claimed twice.
• Skipping Annexure II in the Q4 24Q, which makes a complete Form 16 impossible.
• Filing the 27EQ on the month-end like a TDS statement, when TCS statements are due on the 15th.
• Assuming your ITR and your TDS statements live in different worlds. Tax that was deductible but not deducted, or not deposited by the return due date, gets 30% of the payment disallowed when computing your business income — which shows up in your own income tax return, not in your TDS file.

Why statements get rejected, and what a default looks like

A statement can fail at two different points, and they need different responses.

At validation, before it is accepted. Common causes: challan details that cannot be matched to the deposit, a section code inconsistent with the Act in force on the date of credit or payment, structurally invalid or duplicated PANs, Form 27A control totals that do not agree with the statement, or the ₹200-a-day fee not paid before delivery. These are fixed and refiled.

After processing, as a default on TRACES. The statement is accepted, processed under section 399, and an intimation comes back showing short deduction, short payment, a late-deposit interest demand or a PAN error. This is not a rejection — it is a computed demand against your TAN, and it stays there until cleared.

The route out of a default is a correction statement. You have two years from the end of the tax year in which the original statement was due to file one, which is generous, but the interest keeps running in the meantime. Corrections to a quarter governed by the 1961 Act are filed in the old format even after 1 April 2026.

If the default has already turned into a notice, the same discipline applies as anywhere else in tax: reconcile first, respond with evidence, and do not pay a demand before checking whether it is correct — income tax notice reply covers what a proper response looks like.

Late fees and penalties

File late and a fee of ₹200 per day applies under Section 234E until the return is filed, capped at the TDS amount, plus possible penalties for non-filing or incorrect filing. Because the fee accrues daily, even a short delay is worth avoiding.

One long tail worth planning around: an order treating you as an assessee in default can be passed up to six years from the end of the tax year in which the tax was deductible — or two years from the end of the tax year in which a correction statement was delivered, whichever is later. An unresolved default does not quietly expire next year.

The one-month safe harbour

This is the most useful provision in the chapter and the least known.

The penalty of ₹10,000 to ₹1,00,000 for a late statement is not levied for delay alone if you can show two things: that the tax deducted or collected, together with the fee and any interest, was paid to the credit of the Central Government; and that the statement was delivered within one month of the time prescribed for it.

So a Q1 statement due on 31 July, filed on 20 August with the fee and interest paid, attracts the ₹4,000 fee but should not attract the penalty. The same statement filed on 20 September has lost the protection entirely.

Two limits on it. The safe harbour does not cover the ₹200-a-day fee, which runs regardless and must be paid first. And it does not cover a statement filed with incorrect information — that limb of the penalty has no one-month escape, which is a good reason to validate PANs and challans before filing rather than to file something fast and correct it later.

If you never deducted and the payee has already paid

There is a genuine relief here, and it is narrower than it sounds.

You are not deemed an assessee in default for failing to deduct if the payee has furnished a return of income, taken the amount into account in computing that income, and paid the tax due on it — and you obtain an accountant's certificate to that effect in Form 26A.

What survives: the interest for the period of delay, from the date the tax was deductible to the date the payee furnished their return. And, separately, the 30% disallowance of the expenditure if the tax was not deposited by your own return due date. Form 26A closes the default; it does not undo the cost.

After filing

Three things follow every accepted statement.

Issue the certificates. Download Form 16A or Form 16 from TRACES, authenticate it, and send it out by its due date. The certificate is the deductee's evidence, and it is what stops the reconciliation queries.

Watch the intimation. Processing produces an intimation showing any amount payable or refundable. Clear a short-deduction or PAN default early, while the correction window is wide and the interest is small.

Reset for the next quarter. TDS is a rhythm, not an event: deduct, deposit by the 7th, file by the quarter-end date, certify a fortnight later, repeat. Employers carry the extra beat of a fresh salary computation each April — payroll management and TDS on salary cover that side. If you also remit money abroad, the parallel obligation runs through 15CA and 15CB filing, now Forms 145 and 146 under the Income Tax Rules, 2026.

Deduct correctly, deposit on time, then file the quarterly return so the credit reaches the deductee. Rates, forms and due dates change, so confirm the current rules each quarter.

Sources and currency

Applies to: Deductions on or after 1 April 2026 (tax year 2026-27, Income-tax Act, 2025) and FY 2025-26 quarters (Income-tax Act, 1961), India, resident deductees

Checked against the primary sources below on 19 August 2026. TDS rates and thresholds are covered by our separate rates review and are unchanged by the renumbering. One item is deliberately left open: the quarterly statement due dates and form numbers prescribed by the Income Tax Rules, 2026 for tax year 2026-27 were not published on any official page captured on that date, so this guide states the established quarterly rhythm and tells you to confirm the notified date and form on the portal rather than inventing one. Non-resident payments, treaty relief and the higher rate for non-filers are outside this guide.

• Income Tax Department — TDS Compliance FAQs: which Act governs a deduction, and why quoting the old 194-series on a post-April payment can force a correction statement
• Income Tax Department — Tax Payments FAQs: deposit due dates (Rule 218 of the Income Tax Rules, 2026), and interest of 1% and 1.5% under s.398(3)(a)
• TRACES (CPC-TDS, Income Tax Department) — The A-Z of TDS: quarterly statement, Form 16, Form 16A and Form 27D due dates
• TRACES — index of TDS forms 24Q, 26Q, 27Q, 27EQ, 27A and the 26QB/26QC/26QD/26QE challan-cum-statements
• Income-tax Act, 2025 (No. 30 of 2025) — s.392 (salary), s.393 (other payments), s.394 (TCS), s.395 (certificates), s.397 (TAN, PAN and statements), s.398 (default and interest) and s.461 (penalty), Gazette of India
• Finance Act, 2026 (No. 4 of 2026), s.96 — substitutes s.427, the Rs 200-a-day fee for a late TDS or TCS statement, Gazette of India
• Income Tax Department — Income Tax Forms FAQs: lower and nil deduction certificates under s.395(1), and the Form 121 replacement for Forms 15G and 15H