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TDS basics — Who deducts, who receives
TDS (Tax Deducted at Source) is the mechanism where the PAYER deducts tax before making payment to the payee, and deposits this tax to the government. The payee gets credit while filing their ITR.
Companies, partnerships, individuals (above turnover threshold), and certain other entities are required to deduct TDS on specified payments. Common scenarios: salary, professional fees, rent, contractor payments, interest on loans.
Common TDS sections and rates (FY 2026-27)
Section 192 — Salary: As per applicable income tax slab. Use TDS calculator with declarations.
Section 193 — Interest on securities: 10% (if exceeds ₹5,000 per FY)
Section 194 — Dividends: 10% (above ₹5,000 per FY per shareholder)
Section 194A — Interest other than securities: 10% (above ₹40,000 by bank/PO; ₹50,000 for senior citizens; ₹5,000 otherwise)
Section 194C — Contractor/sub-contractor: 1% (individual/HUF), 2% (other)
Section 194D — Insurance commission: 5%
Section 194H — Commission/brokerage: 5% (above ₹15,000)
Section 194I — Rent: 2% (plant/machinery), 10% (land/building) (above ₹2,40,000)
Section 194J — Professional/technical services: 10% (others), 2% (technical services other than professional) (above ₹30,000)
Section 194Q — Purchase of goods: 0.1% (if buyer's turnover > ₹10 cr, payment > ₹50 lakh)
Section 194R — Benefit/perquisite: 10% (FY 2022 onwards)
TDS deposit due dates
Monthly deposit:
- TDS deducted during a month: Deposit by 7th of next month
- Exception: TDS for March: Deposit by 30 April
Use Challan 281 (TDS challan). Pay online via NSDL portal or net banking. Get Challan Identification Number (CIN) after payment.
Penalty for late deposit: Interest at 1.5% per month (or part) on the tax amount.
Quarterly TDS returns
File TDS returns quarterly:
- Q1 (April-June): Due 31 July
- Q2 (July-September): Due 31 October
- Q3 (October-December): Due 31 January
- Q4 (January-March): Due 31 May (next FY)
Forms used:
- Form 24Q — Salary TDS (Section 192)
- Form 26Q — Other resident payments
- Form 27Q — Payments to non-residents
Late filing: ₹200/day late fee (capped at total TDS amount).
TDS certificates — Form 16, 16A
After return filing, issue TDS certificates to payees:
- Form 16 (annual) — For salaried employees, issued by 15 June of next FY
- Form 16A (quarterly) — For non-salary TDS, issued within 15 days of return filing
These are downloaded from TRACES portal. Employees/vendors use these to claim TDS credit while filing their ITR.
Non-issuance attracts penalty under Section 272A — ₹100/day for delayed certificate.
Higher TDS for non-PAN holders
If payee doesn't furnish PAN (Section 206AA): TDS at the HIGHER of:
- The applicable rate, OR
- 20% (most cases), OR
- 5% (where applicable rate is below 20%)
Higher TDS also for non-filers of income tax (Section 206AB) — payee who hasn't filed ITR for past 2 years faces 2x normal rate (subject to checks).
Use TRACES portal to verify PAN and check filer status before deduction.