TDS Compliance & Planning

Tax Deducted at Source under Chapter XVII-B of the Income Tax Act: any person (company, firm, individual whose accounts were tax-audited in the immediately preceding year) must deduct TDS at the time of payment. Key rates: salary (Sec 192, IT Act 1961 (≡ §392, IT Act 2025) — at applicable slab rate), professional fees (Section 194J — 10%), contractor payments (Section 194C — 1% individual/2% others), rent above ₹50,000/month (Section 194-IB — 5% for individual payors, 10% under 194-I for companies), interest (Section 194A — 10%), and property purchase above ₹50 lakh (Section 194-IA — 1%).

TDS must be deposited via Challan 281 by the 7th of the following month (except March — 30 April). Section 201(1A): interest at 1.5% per month (or part of a month) from the date of deduction to date of payment for non-payment/late payment. Section 40(a)(ia): 30% of the payment is disallowed as a deduction in the payer's income if TDS is not deducted (or 30% of short-deduction). Note: if the recipient has paid tax on the income, the Section 40(a)(ia) disallowance is waived — the payer files a certificate from the payee's CA (Section 201(1) proviso).

Quarterly TDS return filing (Form 26Q for non-salary, 24Q for salary, 27Q for non-residents): Q1 (April–June) — 31 July; Q2 (July–September) — 31 October; Q3 (October–December) — 31 January; Q4 (January–March) — 31 May. Late filing: ₹200/day under Section 234E from the due date until the filing date (no cap). Incorrect TDS return (wrong PAN, wrong amount): Section 271H penalty ₹10,000–₹1 lakh.

Form 16: TDS certificate for salary — issued by employer by 15 June of the following financial year; Part A (TDS details from TRACES) + Part B (salary breakup, deductions). Form 16A: TDS certificate for non-salary payments — issued by the deductor within 15 days of the due date for filing the quarterly TDS return. Form 26AS: annual tax credit statement — shows all TDS/TCS deducted, advance tax paid, and SFT (high-value transaction) data. The AIS (Annual Information Statement) is the expanded successor to 26AS, including dividend income, mutual fund transactions, and foreign remittances.

Section 194-IA: a buyer of immovable property (other than agricultural land) for consideration ≥ ₹50 lakh must deduct TDS at 1% of the total consideration (including GST, stamp duty, car park, amenities). TDS is deducted at the time of each payment (including advance). Deposit via Form 26QB (online) within 30 days of the end of the month of deduction. Buyer must issue Form 16B to the seller within 15 days of the due date of Form 26QB. No TAN required for Section 194-IA — PAN is sufficient. Penalty for non-deduction: interest + 30% disallowance of the property cost in the buyer's books.