Quarterly TDS Return Filing Services in India — FY 2025-26

Complete Guide to Quarterly TDS Return Filing (FY 2025-26)

Tax Deducted at Source (TDS) is one of the most important compliance obligations under the Indian Income Tax Act, 1961. Any person or entity making specified payments — such as salary, rent, professional fees, contractor payments, commission, interest, or dividends — above the prescribed threshold is required to deduct TDS at the applicable rate and deposit it with the government. But deducting and depositing TDS is only the first step. Every deductor must also file quarterly TDS returns reporting all deductions made during the quarter — and failure to do so attracts mandatory penalties.

TDS returns serve a critical function in India's tax ecosystem. They populate the Form 26AS and Annual Information Statement (AIS) of every deductee — ensuring that the tax credit for the amount deducted is reflected in the deductee's income tax account. Errors, delays, or non-filing of TDS returns directly impact deductees — resulting in mismatch notices, inability to claim TDS credit while filing their own ITR, and refund delays. This makes accurate and timely TDS return filing not just a legal requirement but a responsibility towards employees, vendors, and other deductees.

Taxvio, based in Khatauli (Muzaffarnagar, UP), provides end-to-end quarterly TDS compliance services for businesses, companies, firms, and proprietors across Uttar Pradesh and pan-India. Our expert team handles TDS computation, challan payment guidance, quarterly return filing (Form 24Q, 26Q, 27Q, 27EQ), Form 16/16A generation, TRACES correction statements, and TDS notice resolution.

Who Is Required to Deduct TDS and File TDS Returns?

The obligation to deduct TDS and file quarterly returns applies to a wide range of payers — not just large companies. The following entities are mandatorily required to obtain a TAN (Tax Deduction Account Number) and comply with TDS provisions:

• Companies (private limited, public limited, OPC) — on salary, contractor payments, rent, professional fees, interest, dividends, and all other specified payments.
• Partnership Firms & LLPs — on all payments above TDS thresholds.
• Proprietors liable to tax audit — on professional fees, contractor payments, rent exceeding ₹2.4 lakh per year, and other specified payments.
• Central & State Government offices — on all payments including salary and contractor bills.
• Trusts, NGOs & Section 8 Companies — on salary paid to employees and other applicable payments.
• Individuals & HUFs liable to audit — on professional fees, contractor payments, and rent exceeding the threshold.

TDS Return Forms — Which Form to File and When

Different TDS return forms are prescribed for different types of payments. Filing the wrong form — or missing a form — is a common compliance error. Here is a complete breakdown:

• Form 24Q — Filed for TDS deducted on salary payments to employees. Includes employee-wise salary details, deductions claimed (80C, HRA etc.), and tax computation. Q4's Form 24Q (Annexure II) forms the basis for issuing Form 16 to employees.
• Form 26Q — Filed for TDS on all non-salary payments to residents — professional fees (194J), contractor payments (194C), rent (194I), interest (194A), commission (194H), dividends (194), lottery winnings (194B), and more. This is the most widely filed TDS return form.
• Form 27Q — Filed for TDS on payments to non-residents and foreign companies — including fees for technical services, royalties, interest, and other income with India-source nexus. Applicable where DTAA (Double Tax Avoidance Agreement) provisions may also need consideration.
• Form 27EQ — Filed for TCS (Tax Collected at Source) — applicable on collection from buyers of specified goods (scrap, tendu leaves, alcohol) and on high-value transactions like foreign remittances under LRS (Section 206C).

TDS Compliance Process — From Deduction to Return Filing

TDS compliance involves multiple steps that must be completed in the correct sequence every quarter to avoid penalties and deductee mismatches:

• Step 1 — Obtain TAN — Tax Deduction Account Number is mandatory before making any TDS-applicable payment. TAN is applied via Form 49B at an NSDL facilitation centre or online.
• Step 2 — Deduct TDS at the Correct Rate — TDS must be deducted at the rate prescribed under the relevant section at the time of payment or credit, whichever is earlier. If the deductee does not furnish PAN, TDS must be deducted at the higher of the prescribed rate or 20% under Section 206AA.
• Step 3 — Deposit TDS Challan — TDS deducted must be deposited with the government using Challan 281 by the 7th of the following month (for March deductions: by 30th April). Late deposit attracts interest at 1.5% per month under Section 201(1A).
• Step 4 — File Quarterly TDS Return — After depositing all challans for the quarter, the TDS return (24Q / 26Q / 27Q / 27EQ) must be filed on the TRACES / TIN-NSDL portal by the prescribed due date.
• Step 5 — Generate & Issue Form 16 / 16A — After successful return filing, Form 16 (for salary) and Form 16A (for non-salary) must be downloaded from TRACES and issued to deductees within the prescribed time — enabling them to claim TDS credit in their own ITR.

TDS Penalties & Interest — What You Risk by Non-Compliance

TDS non-compliance is one of the most penalised areas under the Income Tax Act. Here is a complete overview of the financial consequences:

• Section 201(1A) — Interest on Late TDS Deposit — 1% per month (or part of month) for failure to deduct TDS, and 1.5% per month for failure to deposit TDS after deduction. Calculated from the date of deduction / due date to actual deposit date.
• Section 234E — Late Filing Fee — A mandatory fee of ₹200 per day from the due date of return until the date of actual filing, subject to a maximum equal to the TDS amount for that quarter. This is not a penalty that can be waived — it is automatically calculated and must be paid before the return can be filed.
• Section 271H — Penalty for Non-Filing — If a TDS return is not filed within one year of the due date, the Assessing Officer can levy a penalty between ₹10,000 and ₹1,00,000. This is in addition to the Section 234E late fee.
• Section 40(a)(ia) — Disallowance of Expenses — If TDS is not deducted or deposited on payments like professional fees, contractor charges, or rent, 30% of the expense is disallowed as a deduction in the payer's income tax computation — significantly increasing taxable income.
• Section 276B — Prosecution — Wilful failure to deposit TDS with the government after deduction can result in criminal prosecution with imprisonment of 3 months to 7 years plus fine. This is among the most serious consequences in Indian tax law.

Form 16 & Form 16A — Generation, Issuance & Due Dates

After filing TDS returns, deductors must generate and issue TDS certificates to deductees:

• Form 16 (Salary TDS Certificate) — Must be issued by employers to employees by 15th June of the assessment year. It consists of Part A (downloaded from TRACES — TDS deducted and deposited quarter-wise) and Part B (salary breakup, exemptions, deductions — prepared by employer). Employees cannot file their ITR-1 / ITR-2 accurately without Form 16.
• Form 16A (Non-Salary TDS Certificate) — Must be issued to deductees (vendors, professionals, landlords etc.) within 15 days of the due date of the respective quarterly TDS return. Form 16A is downloaded directly from TRACES using the deductor's login and is digitally signed.
• Form 16B (TDS on Property Sale) — Issued by property buyer to seller for TDS deducted under Section 194IA on purchase of immovable property exceeding ₹50 lakh. Must be generated from TRACES within 15 days of challan deposit.
• Form 16C (TDS on Rent) — Issued by tenant (individual/HUF) to landlord for TDS deducted under Section 194IB on monthly rent exceeding ₹50,000. Generated from TRACES.

TRACES — TDS Correction Statements & Common Errors

TRACES (TDS Reconciliation Analysis and Correction Enabling System) is the Income Tax Department's portal for TDS compliance. Common errors that require correction statements include:

• Wrong PAN of deductee — Results in TDS credit not appearing in the deductee's Form 26AS. Most common and critical error.
• Incorrect challan details — Wrong BSR code, challan serial number, or deposit date causes challan-to-return mismatch.
• Wrong TDS amount — Overstated or understated TDS amounts that need correction.
• Missing deductee entries — Payments made but deductee entries not included in the original return.
• Wrong section code — TDS deducted under an incorrect section (e.g., 194J instead of 194C).