Introduction

Tax Deducted at Source (TDS) is one of the key mechanisms by which the government ensures regular tax collection throughout the year.
It is designed to collect tax at the very moment income is generated — whether through salary, rent, interest, professional fees, or contract payments.

For businesses and individuals making payments, understanding the TDS process, rates, and due dates is essential to remain compliant and avoid penalties.
In this guide, Bisways Consulting Group breaks down the fundamentals of TDS, its filing forms, and key deadlines every taxpayer should remember.

What Is TDS and How It Works

TDS is a method where a specified percentage of tax is deducted by the payer (known as the deductor) before making payment to the receiver (the deductee).
The deductor then deposits this tax directly with the government on behalf of the deductee.

For example:

If you pay ₹1,00,000 as professional fees and the TDS rate is 10%, you must deduct ₹10,000 and remit ₹90,000 to the professional.
The ₹10,000 deducted is then deposited to the government under Section 194J of the Income Tax Act.

Who Should Deduct TDS

TDS is applicable to:

• All companies, LLPs, and partnership firms.

• Individuals and HUFs whose business turnover exceeds ₹1 crore or professional receipts exceed ₹50 lakh.

• Government bodies and local authorities.

Even individuals not covered under tax audit may have to deduct TDS in certain cases such as property purchase (under Section 194-IA).

Common TDS Sections and Rates

💡 Tip: Always verify PAN of the payee. If invalid or not furnished, TDS must be deducted at 20% (Section 206AA).

Common TDS Sections and Rates

1. Deduct TDS at the time of payment or credit, whichever is earlier.

2. Deposit the amount to the government using Challan ITNS 281 within the due date.

3. File quarterly TDS returns using the correct form:

• Form 24Q: Salary TDS

• Form 26Q: Non-salary TDS (domestic payments)

• Form 27Q: Non-resident TDS

• Form 27EQ: For TCS

4. File quarterly TDS returns using the correct form:

• Form 16: For salary employees (annually).

• Form 16A: For all other payments (quarterly).

TDS Due Dates to Remembers

⚠️ Late Payment Penalties:

• Interest @1% per month for non-deduction.

• Interest @1.5% per month for late deposit.

• Penalty of ₹200 per day for late filing of return under Section 234E.

Verification & Reconciliation

• Check all TDS credits on the Income Tax Portal using Form 26AS or Annual Information Statement (AIS).

• Match TDS entries with your TDS certificates before filing ITR.

• Report any discrepancies to the deductor immediately to file a correction statement (Form 27A).

Conclusion

TDS compliance is not just about deduction — it’s about timely deposit, accurate reporting, and error-free reconciliation.
By maintaining discipline and following the correct forms and due dates, businesses can ensure smooth tax compliance and avoid unnecessary interest or penalties.