Tax Deducted at Source (TDS) is the mechanism by which the payer deducts a percentage of tax from certain payments (salary, contractor fees, rent, professional fees) before remitting the balance to the payee. Every business making such payments above the threshold limit must obtain a TAN, deduct and deposit TDS by the 7th of the following month, and file quarterly TDS returns (Form 26Q for domestic, 27Q for foreign payments). BigMind Consulting manages TDS compliance, Form 16/16A generation, and quarterly return filing for businesses in India and India.
Common TDS sections and applicable rates
| Section | Payment Type | Threshold | TDS Rate |
|---|---|---|---|
| 192 | Salary | Above basic exemption limit | As per applicable income tax slab |
| 194C | Contractor / Sub-contractor payments | ₹30,000 per payment or ₹1L aggregate per year | 1% (individual/HUF) / 2% (others) |
| 194J | Professional / Technical fees, royalty | ₹30,000 per year per payee | 10% (2% for technical services) |
| 194I | Rent (land, building, machinery) | ₹2.4 lakh per year | 10% (land/building) / 2% (plant & machinery) |
| 194H | Commission or brokerage | ₹15,000 per year | 5% |
| 194A | Interest (other than on securities) | ₹40,000 per year (banks) / ₹5,000 others | 10% |
Rates shown are standard rates. A 20% higher TDS rate applies if the payee does not furnish their PAN. Surcharge and education cess apply to applicable categories.
TDS deposit and return filing due dates
Monthly TDS Deposit
- TDS must be deposited by the 7th of the following month
- Exception: TDS for March must be deposited by 30 April
- Payment via NSDL portal using TAN and Challan ITNS 281
Quarterly TDS Return Filing
- Q1 (Apr–Jun) — 31 July
- Q2 (Jul–Sep) — 31 October
- Q3 (Oct–Dec) — 31 January
- Q4 (Jan–Mar) — 31 May
TDS return forms
Form 24Q
Quarterly TDS return for salary payments (Section 192). Filed by employers for TDS deducted on employee salaries.
Form 26Q
Quarterly TDS return for all non-salary domestic payments (contractor fees, rent, professional fees, interest, commission, etc.).
Form 27Q
Quarterly TDS return for payments made to non-residents and foreign companies (other than salary, which is Form 27A).
Penalties for TDS non-compliance
| Non-Compliance | Penalty / Interest |
|---|---|
| TDS not deducted when required | Interest at 1% per month from the date TDS was due to be deducted to date of deduction |
| TDS deducted but not deposited on time | Interest at 1.5% per month from date of deduction to date of actual deposit |
| Late filing of TDS return (Form 26Q / 24Q) | ₹200 per day (Section 234E) until return is filed, subject to maximum of TDS amount |
| Failure to file TDS return | Minimum ₹10,000, maximum ₹1,00,000 (Section 271H) |
| Incorrect information in TDS return | Minimum ₹10,000, maximum ₹1,00,000 (Section 271H) |
Frequently Asked Questions
When is a business required to deduct TDS in India?
A business must deduct TDS when making payments that exceed specified threshold limits under the applicable TDS section. Common examples: contractor payments above ₹30,000 (194C), professional fees above ₹30,000 (194J), rent above ₹2.4 lakh/year (194I), and salary above the basic exemption limit (192).
What is TAN and how do I obtain it?
TAN (Tax Deduction Account Number) is a 10-digit alphanumeric number mandatory for every entity required to deduct or collect TDS/TCS. It is obtained by filing Form 49B with the NSDL/UTIITSL portal. BigMind Consulting obtains TAN as part of the company incorporation process via SPICe+.
What is the due date for quarterly TDS return filing?
TDS returns are filed quarterly: Q1 (Apr-Jun) by 31 July, Q2 (Jul-Sep) by 31 October, Q3 (Oct-Dec) by 31 January, and Q4 (Jan-Mar) by 31 May. For government deductors, Q4 due date is 15 May.
What is Form 16 and Form 16A?
Form 16 is the TDS certificate issued to employees showing salary paid and TDS deducted during the year. Form 16A is the TDS certificate for non-salary payments (contractor, rent, professional fees, etc.). Both must be issued to the deductee within 15 days of the due date of filing the corresponding TDS return.
What is the penalty for late deposit of TDS?
Interest at 1.5% per month (or part thereof) applies if TDS is deducted but not deposited to the government on time. Additionally, a penalty under Section 271C of ₹100–₹200 per day (up to the TDS amount) applies for failure to file the quarterly return. The maximum late filing penalty is ₹1 lakh.
Related Guides
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BigMind Consulting handles monthly TDS deposit, quarterly return filing (26Q/24Q), and Form 16/16A generation in India and India.
BigMind Consulting · TDS Compliance & Tax Filing · India