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    TDS — deductor-side compliance and calculators

    Everything a deductor needs — 194A, 194C, 194J, 194Q, TDS interest, penalty and quarterly return filing.

    Written by Taxpex CA TeamReviewed by Taxpex Editorial Board 10 min readUpdated Sept 2026
    ₹9.7 L Cr
    TDS collected FY24
    > 60% of direct tax
    ₹200/day
    234E late fee
    Capped at TDS amount
    1.5%/month
    Interest on delayed deposit
    Section 201(1A)
    Quarterly
    Return frequency
    24Q / 26Q / 27Q / 27EQ
    The essentials

    Everything you need to know, in one glance

    What it is

    A collection mechanism where the payer withholds a specified percentage of the payment and deposits it as income tax on behalf of the payee.

    Why it matters

    TDS provides steady revenue to the government, creates an audit trail of transactions, and reduces year-end tax evasion. For the payee, it becomes a credit in Form 26AS at ITR time.

    When it applies

    On every payment covered under Chapter XVII-B of the Income-tax Act — at credit or payment, whichever is earlier — for every deductor above threshold turnover.

    Who it's for

    Every company, firm, LLP; every individual/HUF whose books were audited in the immediately preceding year; every employer.

    How it works

    Obtain TAN → deduct at the correct section rate → deposit by 7th of next month via Challan 281 → file quarterly return → issue Form 16/16A within 15 days of return due date.

    Overview

    Tax Deducted at Source (TDS) is India's pay-as-you-earn mechanism — the payer deducts income tax on specified payments (salary, professional fees, contracts, rent, interest, purchase of goods above ₹50 lakh) and deposits it with the government within 7 days.

    This hub covers every practical TDS scenario — Sections 192, 194A, 194C, 194J, 194Q, 194R, 194S, threshold limits, rates, calculators, quarterly returns (Form 24Q, 26Q, 27Q, 27EQ), TDS certificates (Form 16, 16A, 16B), interest under 201(1A), late-filing fee under 234E, and TDS credit reconciliation in 26AS.

    In-depth guide

    The complete playbook

    01

    The 10 TDS sections that cover 95% of business payments

    Sec 192 (salary — computed on annual estimate), Sec 194A (interest other than securities @ 10%, threshold ₹40k / ₹50k for seniors), Sec 194C (contractor payments @ 1% individual / 2% others, threshold ₹30k single / ₹1L aggregate), Sec 194H (commission @ 5%, threshold ₹15k), Sec 194I (rent @ 10% land/building / 2% P&M, threshold ₹2.4L), Sec 194J (professional/technical fees @ 10% / 2%, threshold ₹30k).

    Newer sections: Sec 194Q (purchase of goods > ₹50L from same seller @ 0.1%, buyer with turnover > ₹10 Cr), Sec 194R (perquisites/benefits in course of business @ 10%), Sec 194S (crypto/VDA transfers @ 1%), Sec 194T (partnership firm payments to partners > ₹20k, w.e.f. Apr 2025 @ 10%). Get any of these wrong and it's the deductor's liability under Sec 201.

    02

    Quarterly returns, interest and the 234E trap

    TDS is deposited monthly (by 7th) but returns are quarterly — Form 24Q for salary, 26Q for non-salary residents, 27Q for non-residents, 27EQ for TCS. Due dates: 31 July (Q1), 31 October (Q2), 31 January (Q3), 31 May (Q4). Late deposit attracts 1.5% per month interest under Sec 201(1A) from the date of deduction until payment.

    The 234E late-filing fee is the silent killer — ₹200 per day of delay in filing the quarterly return, capped at the TDS amount for that quarter. A 90-day delay on a ₹40,000 TDS quarter = ₹18,000 fee. Auto-generated intimations under Sec 200A now appear within days of the due date, so filing on time is non-negotiable.

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    Real-world scenarios

    Who uses this, and how

    Company paying contractors

    194C @ 1%/2%; PAN verified; single/aggregate threshold tracked.

    Professional services firm

    194J on consultants @ 10%; @2% for technical services / royalty.

    Buyer of goods > ₹10 Cr turnover

    194Q @ 0.1% above ₹50L per seller; TCS coordination with seller.

    SaaS company paying foreign vendors

    195 with DTAA relief; Form 15CA/15CB; TRC + PE analysis.

    Company giving employee benefits

    194R for gifts/perks > ₹20k in a year; grossing up if borne by giver.

    Process

    Step-by-step, from start to finish

    1. 01Deduct at credit / payment
      Ongoing

      Whichever is earlier

    2. 02Deposit via Challan 281
      Monthly

      By 7th of next month; 30 April for March

    3. 03Quarterly return filing
      31 Jul / Oct / Jan / May

      24Q / 26Q / 27Q / 27EQ

    4. 04TDS certificate
      Within 15 days

      Form 16 / 16A download from TRACES

    Ready-to-use checklist

    Everything you'll need before you start

    • TAN obtained and quoted on every challan and return
    • PAN verified for every vendor (higher rate under Sec 206AA if invalid)
    • Section-wise ledger — 194C, 194J, 194H, 194I, 194Q — with threshold tracking
    • Monthly TDS deposit by 7th of next month (30 April for March)
    • Quarterly TDS return filed by due date
    • Form 16A / 16 issued to deductees within 15 days of return due
    • Compliance check for Sec 206AB (higher rate for non-filers) done annually
    Common pitfalls

    Mistakes that cost businesses money

    Deducting under the wrong section — commonly 194C vs 194J for AMC/software payments

    Missing the ₹30k single / ₹1L aggregate threshold under 194C

    Not deducting on Y-o-Y crossing of ₹50L under 194Q from the same seller

    Late deposit — 1.5%/month interest compounds fast

    Not filing quarterly return because 'nil deduction' — nil return is still due

    Ignoring 206AB check — leads to double the applicable rate for non-filer vendors

    Industries served

    Trusted across sectors

    All employers All Pvt Ltd / LLP Buyers > ₹10 Cr t/o Contractors' clients Rent payers
    CA insights

    What our CAs recommend

    Run Sec 206AB compliance check every April for the top 50 vendors — one non-filer at higher rate can save you a Sec 201 default notice.

    For 194Q vs 206C(1H) overlap — the buyer's obligation (194Q) prevails; seller stops deducting TCS.

    Always keep a 'threshold tracker' Excel per vendor per section — auto-alerts prevent the ₹30k / ₹50L slips that cause 90% of notices.

    Reviewed by Taxpex Editorial Board · Independent CA review
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    Everything on Taxpex about TDS

    People also ask

    Do you manage TDS for payroll?+

    Yes — monthly TDS, quarterly 24Q/26Q returns and Form 16 generation.

    via Compliance Services
    What is Form 16 vs 16A?+

    Form 16 is for salary TDS (annual); Form 16A is for non-salary TDS (quarterly).

    via TDS Return Filing
    Can you correct an earlier TDS return?+

    Yes — we file correction statements on TRACES to fix PAN errors, challan mismatches or under-deduction.

    via TDS Return Filing
    Is FD interest taxable?+

    Yes. FD interest is taxable at your slab rate and TDS is deducted if interest crosses ₹40,000/year (₹50,000 for senior citizens).

    via FD Calculator
    Is EPF withdrawal tax-free?+

    Yes if you complete 5 years of continuous service. Earlier withdrawal is taxable and may attract TDS.

    via EPF Calculator
    When do TDS returns need to be filed?+

    Quarterly — by the 31st of the month following the quarter (31 Jul, 31 Oct, 31 Jan, 31 May).

    via TDS Return Filing
    FAQs

    Frequently asked

    What is the TDS rate on professional fees?+

    Under Section 194J, TDS is deducted at 10% on professional fees, royalty and non-compete fees, and at 2% on fees for technical services (post-Apr 2020). Threshold is ₹30,000 per payee per FY.

    When should TDS be deposited?+

    By the 7th of the month following the deduction month, except for March which has a special deadline of 30 April. Late deposit attracts 1.5% per month interest from date of deduction until payment.

    What is Section 194Q?+

    TDS at 0.1% on purchase of goods above ₹50 lakh from a single seller in a financial year, applicable to buyers with turnover > ₹10 crore in the preceding FY. Overrides TCS under 206C(1H).

    What is the penalty for late TDS return filing?+

    ₹200 per day of delay under Section 234E, capped at the TDS amount for that quarter. Continuous default can additionally attract prosecution under Section 276B.

    Do you manage TDS for payroll?+

    Yes — monthly TDS, quarterly 24Q/26Q returns and Form 16 generation.

    What is Form 16 vs 16A?+

    Form 16 is for salary TDS (annual); Form 16A is for non-salary TDS (quarterly).

    Can you correct an earlier TDS return?+

    Yes — we file correction statements on TRACES to fix PAN errors, challan mismatches or under-deduction.

    Is FD interest taxable?+

    Yes. FD interest is taxable at your slab rate and TDS is deducted if interest crosses ₹40,000/year (₹50,000 for senior citizens).

    Related searches
    tds section 194c rate194j tds rate194q tds on purchase194r perquisite tdsform 26q filingtds interest 201234e late feetraces logintds return due datetds refund claimform 15g 15h
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