What is TDS?
Tax Deducted at Source (TDS) is a mechanism under the Income Tax Act, 1961 where tax is deducted at the time of making specified payments such as salary, professional fees, rent, interest, commission, and contractor payments. The deducted tax is deposited with the government and credited to the PAN of the recipient, who can adjust it against their total tax liability or claim a refund.
Is TAN Registration Mandatory?
Yes. Any person responsible for deducting TDS must obtain a Tax Deduction and Collection Account Number (TAN) before deducting tax.
TAN is mandatory for:
- Companies
- Partnership firms
- LLPs
- Proprietorships
- Individuals subject to tax audit
- Employers deducting TDS on salary
Failure to obtain TAN may attract penalties under Section 272BB.
TDS Payment Due Dates (Non-Government Deductors)
| Month of Deduction | Due Date for Deposit |
|---|---|
| April to February | 7th of the next month |
| March | 30th April |
All companies and persons liable for tax audit under Section 44AB must deposit TDS electronically through challan ITNS 281.
Interest & Penalties for TDS Non Compliance
1. Interest under Section 201(1A):
- 1% per month (for non-deduction of TDS)
- 1.5% per month (for non-deposit after deduction)
Interest is calculated from the date of deduction to the date of actual deposit.
2. Late Filing Fee under Section 234E:
₹200 per day until TDS return is filed (subject to TDS amount limit).
3. Penalty under Section 271H:
₹10,000 to ₹1,00,000 for failure to file TDS return.
TDS Return Filing (Quarterly)
TDS returns must be filed quarterly in the following forms:
| Form | Nature of Payment |
|---|---|
| 24Q | Salary payments |
| 26Q | Non-salary payments (Resident) |
| 27Q | Payments to Non-Residents |
| 27EQ | TCS return |
Quarterly TDS Return Due Dates
| Quarter | Due Date |
|---|---|
| April–June | 31st July |
| July–September | 31st October |
| October–December | 31st January |
| January–March |
TDS Certificates
- Form 16 – Issued for salary TDS (annually)
- Form 16A – Issued for non-salary TDS (quarterly)
These must be downloaded from TRACES portal and issued within prescribed timelines.
TDS Reconciliation & Form 26AS
Deductees can verify TDS credit in:
- Form 26AS
- Annual Information Statement (AIS)
- TRACES portal
Mismatch in TDS reporting may lead to tax notices or denial of credit.
For professional assistance with TAN registration, TDS computation, deposit, return filing, and reconciliation, consult experienced tax professionals to ensure timely and compliant reporting.
