What is TDS?
Under TDS, the person making certain payments, such as salary, rent, contractor payments, professional fees, commission or interest, deducts tax at the prescribed rate and deposits it with the government. The recipient gets credit for this tax against their own tax liability.
From tax year 2026-27, TDS is governed by the Income-tax Act, 2025, which consolidates most TDS provisions and renumbers them. The rates and thresholds should be checked against the current law for each payment.
Who Must Deduct TDS?
- Companies, LLPs and firms making specified payments
- Individuals and HUFs carrying on business or profession above the tax audit limits, for most payments
- All employers paying salary above the taxable limit
- Certain individuals for specific payments, such as rent above a prescribed monthly amount or purchase of immovable property above the prescribed value
TDS Compliance Cycle
1. Obtain TAN
A Tax Deduction and Collection Account Number (TAN) is required before deducting tax.
2. Deduct at the right time and rate
TDS is generally deducted at the time of payment or credit, whichever is earlier. Rates depend on the nature of payment and whether the recipient has furnished PAN.
3. Deposit monthly
TDS is generally deposited by the 7th of the following month, with a later date for tax deducted in March.
4. File quarterly TDS statements
Quarterly statements for salary, non-salary and non-resident payments are filed by the prescribed due dates, generally 31 July, 31 October, 31 January and 31 May for the four quarters.
5. Issue TDS certificates
Form 16 for salary and Form 16A for other payments (or the equivalent forms under the new rules) are issued within the prescribed time.
Documents and Data Needed
- TAN and login details of the TRACES and income tax portals
- Payment ledgers for salary, rent, contractors, professionals and interest
- PAN of all deductees
- Challan details of tax deposited
- Lower deduction certificates, if any
Common Mistakes to Avoid
- Wrong PAN of the deductee, which denies credit to the recipient and creates demands
- Short deduction due to the wrong rate or section
- Late deposit, which attracts interest for each month of delay
- Late filing of statements, which attracts a late fee per day
- Not deducting TDS, which can lead to disallowance of the expense in your income tax computation
- Ignoring TRACES defaults until they become large demands
Frequently Asked Questions
Do I need to deduct TDS on rent for my office?
Yes, if rent paid exceeds the prescribed threshold and you are a person required to deduct TDS.
How can I correct a mistake in a filed TDS return?
Corrections are made by filing a correction statement through TRACES. We handle these regularly.
Related Services
Talk to a Chartered Accountant
If you are looking for professional assistance with TDS Compliance and TDS Return Filing in Ghaziabad, contact us for detailed guidance.
CA Mayank Agarwal (Chartered Accountants)
Raj Nagar Extension & Indirapuram, Ghaziabad
Phone / WhatsApp: 9718877122 | Email: fcamayankagarwal@gmail.com
This page gives general information for guidance only. Laws, forms, fees and timelines change from time to time and depend on individual facts, so please confirm the current position before acting. See all our service guides.