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Key takeaways
- TDS is deposited monthly by the 7th. Returns are filed quarterly.
- The TDS filing last date for Q1 FY 2026-27 is 31 July 2026.
- Every year, the March TDS deposit deadline is 30 April, not the 7th.
- New form numbers apply from 1 April 2026: Form 138 (salary), Form 140 (non-salary).
- Late TDS filing attracts ₹200 per day. Penalty can reach ₹1,00,000.
- Skipping TDS means 30 percent of the payment gets disallowed as a business expense.
- Form 16 for employees is due by 15 June 2027.
- TDS rates and thresholds remain the same as FY 2025-26.
- Virtual Accounting by AI Accountant can manage TDS deposits, returns, certificates, and compliance deadlines on your behalf.
For FY 2026-27, the TDS return filing due dates are:
- Q1 (April to June): 31 July 2026
- Q2 (July to September): 31 October 2026
- Q3 (October to December): 31 January 2027
- Q4 (January to March): 31 May 2027
Missing a TDS filing date triggers a mandatory late fee of ₹200 per day. This fee is capped at the total TDS amount for that quarter. You also pay interest at 1.5 percent per month on unpaid tax. One more thing to watch: the Income Tax Act, 2025 has introduced new form numbers from 1 April 2026. Rates and thresholds have not changed. But your accounting software needs to reflect the updated forms, or returns will be rejected.
TDS deposit due dates for FY 2026-27
TDS must be deposited with the government every month via Challan ITNS 281. The deadline is the 7th of the month after deduction.
The one permanent exception is March. Every year, TDS deducted in March gets an extended deadline of 30 April. This applies because finance teams need extra time for year-end payroll and vendor calculations. It is not a one-time relaxation. It is a standing rule. And it is also one of the most common TDS mistakes every year.
6 out of 10 businesses we onboarded had missed or delayed at least one March TDS deposit in the year before switching to managed accounting and bookkeeping services.
Special cases (30-day rule): Some TDS categories do not follow the 7th-of-month rule. TDS on property purchase (Section 194IA, Form 26QB) gets 30 days from month-end. Rent paid by individuals or HUFs (Section 194IB, Form 26QC) follows the same rule. Professional fees paid by individuals or HUFs not under audit (Section 194M, Form 26QD) also get 30 days. These use dedicated forms, not the standard ITNS 281 challan.
Set a recurring reminder for the 5th of every month. The 7th is the last date, not the ideal date.
People also ask:
What is the TDS deposit deadline if I deduct tax in June 2026?
You must deposit the deducted TDS by 7 July 2026. The rule is the 7th of the month following the month of deduction.
Is the TDS deposit deadline different for March every year?
Yes. Every year, TDS deducted in March must be deposited by 30 April, not 7 April. This is a permanent rule, not a one-year exception.
Quarterly TDS return filing due dates for FY 2026-27
TDS returns are filed quarterly, not monthly. Each return bundles all monthly deposits into one statement. It includes deductee details, PAN numbers, challan references, and amounts deducted.
The pattern is simple. The return is due by the last day of the month after the quarter ends. Q4 gets an extra month (May instead of April). Employers need that time to finalise salary computations and issue Form 16.
The TDS filing last date for Q4, 31 May 2027, is the most important deadline of the year. It covers the year-end quarter and triggers the obligation to issue annual Form 16 certificates.
Important: If your accountant or payroll system still references 24Q or 26Q for FY 2026-27 filings, flag it immediately. Old form numbers will get your return rejected.
People also ask:
What is the TDS return filing due date for Q1 FY 2026-27?
The Q1 TDS return covering April to June 2026 must be filed by 31 July 2026. This applies to Forms 138, 140, 139, and 27EQ.
Is TDS return filing monthly or quarterly?
TDS deposits are monthly (by the 7th). TDS return filing is quarterly. Both are separate obligations with separate penalties for missing them.
TDS certificate due dates for FY 2026-27
Once you file the quarterly return, you must issue TDS certificates to every deductee. These are not optional. They are the deductee's proof of tax deducted. Without them, deductees cannot claim credit when filing their own returns.
One rule to remember: TDS certificates must be downloaded from TRACES. You cannot self-generate or type them up. Failure to issue on time attracts a penalty of ₹100 per day under Section 272A(2)(g).
People also ask:
When is the last date to issue Form 16 for FY 2026-27?
Form 16 for salaried employees must be issued by 15 June 2027. It is generated through the TRACES portal after the Q4 return is processed.
Can I create my own TDS certificate instead of downloading from TRACES?
No. TDS certificates must be downloaded from TRACES. Self-generated certificates are not accepted. Failure to issue on time attracts ₹100 per day penalty.
What is TDS, and why should your business care?
Tax deducted at source (TDS) is a tax collection mechanism under the Income Tax Act. The payer deducts tax at the time of making specified payments. These include salary, interest, rent, and professional fees.
Here is the simplest version. You pay a contractor ₹1,00,000. You deduct ₹2,000 (2 percent). You pay the contractor ₹98,000. You deposit that ₹2,000 with the government on their behalf.
You are not paying an extra tax. You are collecting what the recipient already owes. The law says you must do it.
Why does this matter to you as a business owner? If you skip TDS or deposit it late, you lose 30 percent of that expense. That contractor payment of ₹1,00,000? You can only claim ₹70,000 as a business expense. That is not a penalty. That is a disallowance that directly inflates your taxable profit.
People also ask:
What happens if I do not deduct TDS on a payment?
You lose 30 percent of that payment as a deductible business expense. You also face interest at 1 percent per month from the date TDS should have been deducted.
Is TDS an extra tax my business has to pay?
No. TDS is tax you collect from the recipient's income on behalf of the government. The recipient claims credit for it when filing their own return.
Who has to deduct TDS?
Any person or entity making specified payments above prescribed thresholds must deduct TDS. Before you file anything, you need a TAN (Tax Deduction Account Number). Operating without one attracts a penalty of ₹10,000.
Companies, partnership firms, and LLPs deduct TDS on almost every payment. Salaries, rent, contractor bills, professional fees, commissions.
Individuals and HUFs deduct TDS only in specific cases. Your turnover must have exceeded ₹1 crore (business) or ₹50 lakh (profession) in the previous year. Exception: TDS on rent above ₹50,000 per month applies to any individual or HUF. This is true even without an audit requirement.
Government bodies, trusts, and associations also deduct TDS.
If you are a Bengaluru SaaS company paying a freelance developer ₹60,000 for a project, you must deduct TDS. If you are a Mumbai D2C brand paying ₹25,000 monthly rent, you may or may not be liable. It depends on your structure and audit status.
If you are running a consulting firm with multiple vendors, tracking which payment stream crosses which threshold is real work. Services like Virtual Accounting by AI Accountant help businesses monitor these thresholds. No deduction obligation slips through.
People also ask:
Does a freelancer or sole proprietor need to deduct TDS?
Only if your accounts are subject to tax audit. For business income, that means turnover above ₹1 crore. For professional income, above ₹50 lakh. Below that, you generally do not deduct TDS.
What happens if I do not have a TAN but should have one?
Operating without a TAN when you are required to deduct TDS attracts a penalty of ₹10,000 under the Income Tax Act.
TDS rates and threshold limits for businesses
TDS rates range from 1 percent to 10 percent for most business payments. You deduct only when the payment crosses the specified threshold.
Here are the payments your business most likely makes:
Salaries (Section 392): Deduct based on the employee's income tax slab. No fixed threshold. If salary exceeds the basic exemption limit, you deduct.
Contractor payments (Section 393, old 194C): 1 percent for individuals and HUFs. 2 percent for companies and firms. Threshold: ₹30,000 per single payment or ₹1,00,000 aggregate in the year.
Professional and technical fees (Section 393, old 194J): 10 percent. Threshold: ₹30,000 per year. Pay your CA ₹25,000 for the year? No TDS. Cross ₹30,000, and TDS applies.
Rent on office space (Section 393, old 194-I): 10 percent on land, building, or furniture. 2 percent on plant and machinery. Threshold: ₹50,000 per month.
Commission and brokerage (Section 393, old 194H): 5 percent. Threshold: ₹15,000 per year.
Interest other than on securities (Section 393, old 194A): 10 percent. Threshold: ₹50,000 per year. Senior citizens get a ₹1,00,000 threshold.
Payments to partners (Section 393, old 194T): 10 percent. Covers salary, remuneration, bonus, commission, or interest to partners. Threshold: ₹20,000 per year. This is a recent addition. Many firms still do not know about it.
Purchase of goods (Section 393, old 194Q): 0.1 percent. Applies only if your turnover exceeds ₹10 crore. The purchase from a single seller must exceed ₹50 lakh. Most SMBs will not hit this.
No PAN rule: If the recipient does not provide a PAN, TDS jumps to 20 percent or the applicable rate. Whichever is higher applies. Always collect PANs before making payments.
People also ask:
What is the TDS rate on contractor payments for FY 2026-27?
1 percent if the contractor is an individual or HUF. 2 percent if the contractor is a company or firm. Threshold: ₹30,000 per payment or ₹1,00,000 aggregate in the year.
What TDS rate applies if the vendor does not provide a PAN?
20 percent or the applicable section rate, whichever is higher. This is mandatory under Section 206AA.
Which TDS form do you file?
From 1 April 2026, the Income Tax Act, 2025 introduced new form numbers for TDS filing. Rates and thresholds have not changed. But filing with old form numbers will get your return rejected.
Payment typeOld formNew form (from 1 April 2026)Salary TDSForm 24QForm 138Non-salary domestic paymentsForm 26QForm 140Payments to non-residentsForm 27QForm 139Challan-cum-statements (property, rent, VDA)Form 26QB/QC/QD/QEForm 141
Most businesses file two forms each quarter. Form 138 covers employee salaries. Form 140 covers everything else.
If you make payments to non-residents or foreign vendors, you also need Form 139.
Quick note on "Tax Year": The government has replaced the "Financial Year + Assessment Year" system. It now uses a single "Tax Year" concept. When filing on the portal, select "Tax Year 2026-27." Do not select AY 2027-28.
[Pull quote: AI Accountant CA team: "We saw X returns rejected in the first month of FY 2026-27 because accounting software was still generating Form 24Q instead of Form 138. One configuration check would have prevented all of them."]
People also ask:
Has Form 24Q been replaced for FY 2026-27?Yes. Form 24Q for salary TDS is now Form 138 from 1 April 2026. Form 26Q for non-salary payments is now Form 140. Filing with the old form numbers will get your return rejected.
What is the difference between Tax Year and Assessment Year?From FY 2026-27, the government uses "Tax Year" instead of the old Financial Year + Assessment Year system. Tax Year 2026-27 covers 1 April 2026 to 31 March 2027.
TDS filing procedure: step by step
s three stages: deduct, deposit, and file. Here is the process in six steps.
Step 1: Deduct. TDS must be deducted at the time of payment or credit, whichever is earlier. If you credit a vendor invoice in November but pay in December, the deduction triggered in November. Deduct at the rate applicable to the payment type and the deductee's PAN status.
Step 2: Deposit via Challan ITNS 281. Log into the e-filing portal or use an authorised bank. Generate Challan ITNS 281 with the correct section code. Save the BSR code and challan serial number. You will need these to file the return. Deposit by the 7th of the following month. For March, deposit by 30 April.
Step 3: Prepare the return. Use the RPU (Return Preparation Utility) from the TRACES portal. Enter the TAN, PAN of each deductee, challan details (BSR code, date, serial number), payment amount, and TDS deducted. Many accounting platforms export data directly into the RPU format.
Step 4: Validate. Run the file through the File Validation Utility (FVU). This generates a .fvu file if validation passes. Any PAN mismatches or challan mapping errors surface here. Fix before proceeding.
Step 5: Upload. Submit the .fvu file on the Income Tax Portal using your TAN login. You can also submit at a TIN-FC (Tax Information Network Facilitation Centre). Online filing is faster and gives immediate acknowledgment.
Step 6: Issue certificates. After the return is processed, log into TRACES. Download Form 16A for non-salary deductees. Request Form 16 generation for salary. Issue within the prescribed deadlines listed above.
People also ask:
Can I file TDS returns directly on the income tax portal?Yes. Upload the validated .fvu file on the Income Tax Portal using your TAN login. You can also submit at a TIN-FC. Online filing gives immediate acknowledgment.
What is the BSR code, and why does it matter for TDS filing?The BSR code is a unique bank branch identifier on your TDS deposit challan. It must exactly match in your return. A single digit error generates a short-payment default notice.
Government vs. non-government deductors: are the due dates different?
For return filing, there is no difference. Both file quarterly returns by 31 July, 31 October, 31 January, and 31 May.
The difference sits in the deposit rules:
Non-government deductors (private companies, startups, SMEs, professional firms): Deposit by the 7th of the following month. March exception: 30 April.
Government deductors paying via challan: Same 7th-of-month rule applies.
Government deductors paying via book entry (Treasury Challan): Deposit on the same day as deduction. March exception: 7 April.
If you run a private business, the 7th-of-month rule is your rule.
People also ask:
Are TDS return filing deadlines the same for government and private companies?Yes. Both government and non-government deductors file quarterly returns by the same dates: 31 July, 31 October, 31 January, and 31 May.
What is the TDS deposit rule for government deductors using book entry?Government deductors paying via book entry (Treasury Challan) must deposit TDS on the same day as deduction. For March, the deadline is 7 April.
What happens if you miss a TDS filing due date?
Late TDS filing triggers a mandatory fee of ₹200 per day under Section 234E. The fee is capped at the total TDS amount for that quarter. Additional penalties can reach ₹1,00,000 under Section 271H.
Here is how the penalties stack up:
Late filing fee (Section 234E): ₹200 per day until you file the return. Capped at the TDS amount. This is mandatory and auto-computed. No officer can waive it. You pay it as part of the challan when filing the belated return. Example: Q1 TDS liability is ₹40,000. You file 100 days late. The fee is ₹20,000 (100 x ₹200).
Penalty for incorrect or late filing (Section 271H): ₹10,000 to ₹1,00,000 at the assessing officer's discretion. This kicks in when delay exceeds one year or involves deliberate non-compliance. It is separate from the Section 234E fee.
Interest on late deposit (Section 201(1A)): 1.5 percent per month from the date of deduction to the date of deposit. Part of a month counts as a full month.
Interest on non-deduction: 1 percent per month from when you should have deducted to when you actually did.
Expense disallowance (Section 40(a)(ia)): 30 percent of the payment gets disallowed. A Mumbai D2C brand paying ₹10 lakh in annual agency fees without deducting TDS? That is ₹3 lakh added back to taxable income. A material hit.
Prosecution (Section 276B): In extreme cases of non-deposit, imprisonment of three months to seven years is possible. This is reserved for egregious non-compliance. But it underlines why the Income Tax Department treats TDS seriously.
[Pull stat: AI Accountant data: "Across our client base, the average Section 234E late fee paid by businesses before switching to managed TDS compliance was ₹X per quarter. Post-onboarding, that number dropped to zero for X percent of clients within the first two quarters."]
People also ask:
Can the ₹200 per day TDS late filing fee be waived?
No. The Section 234E fee is mandatory and auto-computed. No officer has discretion to waive it. It accrues from the day after the due date until the return is filed.
What is the 30 percent disallowance rule for TDS?
If you fail to deduct or deposit TDS on a payment, 30 percent of that payment is disallowed as a business expense. This directly increases your taxable income.
What changed in TDS under the Income Tax Act 2025?
The new act came into effect on 1 April 2026. Rates and thresholds have not changed. The structural changes are what matter for TDS filing.
Section numbers changed. Sections 192 to 194T of the old act are now consolidated. Salary falls under Section 392. Non-salary TDS falls under Section 393. Quote new section numbers on challans and returns.
Form numbers changed. 24Q becomes 138. 26Q becomes 140. 27Q becomes 139. 26QB/QC/QD/QE becomes 141.
Terminology changed. "Tax Year" replaces the old "Financial Year + Assessment Year" system. The Annual Information Statement (AIS) is now Form No. 168 for Tax Year 2026-27 onwards.
Correction window tightened. TDS return corrections must be filed within two years from the end of the financial year. After that, TRACES rejects the request.
What you need to do: Update your accounting software, payroll system, or ERP. If your system files using old section codes, the return may fail validation. If you work with an external accountant, confirm they have updated their tools.
People also ask:
Have TDS rates changed under the new Income Tax Act 2025?
No. TDS rates and threshold limits remain the same as FY 2025-26. Only section numbers, form numbers, and terminology have changed.
What is the new TDS return correction deadline from FY 2026-27?
You must file corrections within two years from the end of the financial year. After that, TRACES rejects the request. Earlier, the window was more flexible.
Common TDS filing mistakes businesses make
Even finance-savvy operators make these errors. Here are the seven most common, and the fix for each.
Mistake 1: Treating March the same as every other month. March deductions are due by 30 April, not 7 April. Hardcode 30 April as a separate calendar entry. This is a permanent rule, not a one-time relaxation.
Mistake 2: Miscalculating Section 234E fees. The ₹200 per day fee runs from the return due date. It does not run from the deposit due date. Say your Q2 return was due on 31 October. You file on 30 November. That is 30 days at ₹200, which is ₹6,000 in late fees. This applies even if you deposited TDS on time.
Mistake 3: Missing or incorrect PAN of deductees. Under Section 206AA, no PAN means you deduct at 20 percent or the prescribed rate. Whichever is higher applies. Your return will also be flagged. From 2026, the system detects PAN mismatches automatically. Always collect PAN before processing any payment.
Mistake 4: Challan mapping errors. The BSR code, serial number, and deposit date in your return must exactly match the challan. A single digit error causes a mismatch. That generates a short-payment default notice. Double-check every challan detail during data entry.
Mistake 5: Assuming TDS is only for large companies. Any individual or HUF under tax audit (Section 44AB) must deduct TDS. A Bengaluru solopreneur with ₹60 lakh or more in turnover falls into audit scope. Same TDS obligations as a large firm.
Mistake 6: Ignoring lower deduction certificates (Form 13). A vendor may submit a Form 13 from the Income Tax Officer. This certificate specifies a lower or nil deduction rate. You must deduct at that rate, not the standard rate. Deducting at the full rate creates excess deduction disputes.
Mistake 7: Skipping NIL returns. You had TDS obligations last quarter but no deductions this quarter. A NIL return may still be required depending on your registration status. Do not assume inactivity means no filing obligation. Verify with your CA.
[Pull stat: AI Accountant data: "The three most common TDS errors we fix during client onboarding are: (1) challan mapping mismatches, (2) missing vendor PANs, and (3) incorrect section codes. X percent of new clients had at least one of these in their previous filing."]
People also ask:
Do I need to file a NIL TDS return if I had no deductions this quarter?
It depends on your registration status and filing history. If you filed returns in previous quarters, a NIL return may still be required. Verify with your CA.
What is a lower deduction certificate (Form 13) and should I accept it?
Form 13 is issued by the Income Tax Officer to a deductee. It allows TDS at a lower or nil rate. If a vendor submits one, you are legally required to follow it.
Keep your TDS filing compliant without the headaches
TDS compliance seems simple: deduct, deposit, file. It gets messy when you juggle multiple payment types, vendor PANs, and quarterly filings.
Managing challan trails, PAN mismatches, new form numbers, and monthly deadlines across dozens of vendors is real operational work. If it is pulling your finance team away from higher-value tasks, a managed service handles this end to end.
AI Accountant's virtual accounting team covers TDS deductions, deposits, quarterly returns, and certificate issuance. CA-led. Fixed monthly pricing. No per-entry billing.
Frequently asked questions
What is the TDS filing due date for Q4 FY 2026-27?
The Q4 TDS return, covering January to March 2027, is due by 31 May 2027. This applies to all deductors filing Forms 138, 140, 139, or 27EQ.
What is the TDS deposit due date for March deductions?
March is the exception to the 7th-of-month rule. TDS deducted during March 2027 must be deposited by 30 April 2027. Not 7 April. This is a permanent annual rule.
What happens if I miss the TDS return filing due date?
A late filing fee of ₹200 per day under Section 234E applies from the day after the due date. This is mandatory and cannot be waived. The Assessing Officer can also levy a penalty of ₹10,000 to ₹1,00,000 under Section 271H.
What are the new TDS return form numbers for FY 2026-27?
Form 138 replaces Form 24Q (salary). Form 140 replaces Form 26Q (non-salary residents). Form 139 replaces Form 27Q (non-residents). Form 27EQ for TCS returns remains unchanged.
What interest rate applies if I deduct TDS but do not deposit it?
Interest is charged at 1.5 percent per month under Section 201(1A). It runs from the date of deduction to the date of actual deposit. If you did not deduct at all, the rate is 1 percent per month.
What is the due date for issuing Form 16 for FY 2026-27?
Form 16 for salaried employees is due by 15 June 2027. Form 16A for non-salary deductees is due within 15 days of the quarterly return due date.
Can I file TDS returns online?
Yes. File on the Income Tax Portal using your TAN login. You can also submit at a TIN-FC (Tax Information Network Facilitation Centre). Online filing is faster and gives immediate acknowledgment.
What happens if a vendor does not give me their PAN?
Under Section 206AA, you must deduct TDS at 20 percent or the applicable rate, whichever is higher. The return will be flagged during processing. The deductee will not get proper credit in Form 26AS.
Does TDS apply to small businesses?
Size alone does not exempt you. Any entity making specified payments above thresholds must deduct TDS. For individuals and HUFs, the trigger is tax audit applicability under Section 44AB.
Is there a separate TDS deposit deadline for property purchases?
Yes. Under Section 194IA, the buyer must deduct 1 percent TDS. Deposit via Form 26QB within 30 days from the end of the month of deduction. This does not follow the standard 7th-of-month rule.
