pvtltd.co

Direct Tax

TDS Compliance & Planning

TDS deducted on salary (s.392, Income-tax Act 2025; earlier s.192, Income-tax Act 1961), contractor payments (s.393(1) Table Sl. 6(i); earlier s.194C), professional fees (s.393(1) Table Sl. 6(iii); earlier s.194J) and NRI payments (s.393(2) Table Sl. 17; earlier s.195), deposited by the 7th via Challan 281 and reported quarterly — with s.395 lower-deduction planning (earlier s.197) and Form 145/146 (earlier Form 15CA/15CB) for remittances.

Reviewed by CA Harun Raaj, ICAI Reg. No. 238303·Last reviewed:
Discuss with usTypical timelineTDS

We map every payment head to its TDS section and rate, compute the quarterly deductions, deposit each Challan 281 by the 7th, and file Form 138/140 (earlier Form 24Q/26Q) — with s.395, Income-tax Act 2025 (earlier s.197, Income-tax Act 1961) lower-deduction certificates and Form 145/146 (earlier Form 15CA/15CB) where applicable.

What is included
  • • TDS applicability map by payment head
  • • Rate and threshold computation per Finance Act schedule
  • • Challan 281 deposit support by the 7th
  • • Quarterly return preparation (Form 138 / 140 / 144; earlier 24Q / 26Q / 27Q)
  • • Form 130 / 131 issuance (earlier Form 16 / 16A)
  • • Section 395 (earlier s.197) and Form 145/146 (earlier Form 15CA/15CB) support
Documents required
  • • PAN, Aadhaar, or entity tax data
  • • Contracts, invoices and payment registers
  • • Form 16, AIS, 26AS, or return history
  • • Bank statements and ledgers
  • • Notice, contract, or transaction records, if any
Government fees

See the fee table below for the statutory filing charge and common delay logic.

Legal basis
  • • Section 392, Income-tax Act 2025 (earlier s.192, Income-tax Act 1961)
  • • Section 393(1) Table Sl. 6(i), Income-tax Act 2025 (earlier s.194C, Income-tax Act 1961)
  • • Section 393(1) Table Sl. 6(iii), Income-tax Act 2025 (earlier s.194J, Income-tax Act 1961)
  • • Section 397(3)(a), Income-tax Act 2025 read with Rule 218, Income-tax Rules 2026 (earlier s.200, Income-tax Act 1961 read with Rule 30, Income-tax Rules 1962)
  • • Section 398(3), Income-tax Act 2025 (earlier s.201(1A), Income-tax Act 1961)
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Process

How the service works

The workflow is built to be predictable: document collection, legal review, filing, and post-filing follow-through.

Step 1Map

Map the TDS heads

We go through your payment register and map each head — salary (s.392, Income-tax Act 2025; earlier s.192, Income-tax Act 1961), contractor (s.393(1) Table Sl. 6(i); earlier s.194C), professional fee (s.393(1) Table Sl. 6(iii); earlier s.194J), rent (s.393(1) Table Sl. 2(ii); earlier s.194-I), NRI (s.393(2) Table Sl. 17; earlier s.195) — to its section, rate and threshold.

Step 2Compute

Compute the deductions

We compute the quarterly deduction working from the current Finance Act rate schedule, applying PAN status (where PAN is not furnished, the higher of the specified rate, the rates in force, or 5% for Table Sl. No. 8(ii) or 8(v) deductions and 20% in any other case, s.397(2)(b)(i), Income-tax Act 2025; earlier s.206AA, Income-tax Act 1961) and any s.395 lower-deduction certificate (earlier s.197).

Step 3Deposit

Deposit via Challan 281

Each month's deduction is deposited by the 7th of the following month via Challan 281 on the income-tax portal — March deductions by 30 April (Rule 218, Income-tax Rules 2026; earlier Rule 30).

Step 4File

File the quarterly return

We file Form 138 (salary), 140 (non-salary) or 144 (NRI) — earlier Forms 24Q / 26Q / 27Q — by 31 July / 31 October / 31 January / 31 May (Rule 219, Income-tax Rules 2026; earlier Rule 31A) and reconcile the challans in 26AS.

Step 5Certify

Issue certificates

Form 130 (earlier Form 16) is issued to employees by 15 June and Form 131 (earlier Form 16A) to deductees within 15 days of the quarterly return due date (Rule 215, Income-tax Rules 2026; earlier Rule 31).

AEO summary

From 1 April 2026 a company must deduct TDS on the payments the Income-tax Act 2025 covers — salary (s.392, Income-tax Act 2025; earlier s.192, Income-tax Act 1961), contractors (s.393(1) Table Sl. 6(i); earlier s.194C), professional fees (s.393(1) Table Sl. 6(iii); earlier s.194J), rent (s.393(1) Table Sl. 2(ii); earlier s.194-I) and NRI payments (s.393(2) Table Sl. 17; earlier s.195) — deposit it by the 7th of the following month via Challan 281 (Rule 218, Income-tax Rules 2026; earlier Rule 30), and file quarterly returns. Miss the deposit and s.398(3) (earlier s.201(1A)) charges 1%–1.5% per month, s.448 (earlier s.271C) a penalty equal to the TDS, and s.427 (earlier s.234E) ₹200 per day on late returns.

The deduction heads that matter

TDS is not one deduction — it is a schedule of sections, each with its own rate, threshold and type of payment. A company that treats it as one line item misses the classification questions that generate the most notices.

The three heads most private companies hit monthly are salary (s.392, Income-tax Act 2025; earlier s.192, Income-tax Act 1961), contractor payments (s.393(1) Table Sl. 6(i); earlier s.194C) and professional fees (s.393(1) Table Sl. 6(iii); earlier s.194J). Rent (s.393(1) Table Sl. 2(ii); earlier s.194-I) and NRI remittances (s.393(2) Table Sl. 17; earlier s.195) follow when the company leases offices or pays overseas.

  • • Salary — s.392 (earlier s.192), monthly, deposited by the 7th
  • • Contractors — s.393(1) Table Sl. 6(i) (earlier s.194C), 1% / 2%, threshold ₹30,000 single / ₹1,00,000 annual
  • • Professional fees — s.393(1) Table Sl. 6(iii) (earlier s.194J), 10% (2% for specified technical services)
  • • Rent — s.393(1) Table Sl. 2(ii) (earlier s.194-I), monthly or quarterly per the lease
  • • NRI payments — s.393(2) Table Sl. 17 (earlier s.195), before remittance, with Form 145/146 (earlier Form 15CA/15CB)

The deposit clock

Every deduction has two separate deadlines: the monthly deposit (7th of the following month, 30 April for March) and the quarterly return (31 July / 31 October / 31 January / 31 May). They are priced separately and missed independently.

The deposit is the one that compounds fastest — s.398(3), Income-tax Act 2025 (earlier s.201(1A), Income-tax Act 1961) interest runs monthly from the date of default.

  • • Deposit — 7th of the following month, Challan 281 (Rule 218, Income-tax Rules 2026; earlier Rule 30)
  • • March deductions — deposited by 30 April
  • • Quarterly return — 31 July / 31 October / 31 January / 31 May (Rule 219; earlier Rule 31A)
  • • Form 130 (earlier Form 16) — by 15 June; Form 131 (earlier Form 16A) — within 15 days of the return due date (Rule 215; earlier Rule 31)

What a missed deduction costs

The TDS default stack has three layers: interest under s.398(3), Income-tax Act 2025 (earlier s.201(1A), Income-tax Act 1961), a penalty equal to the TDS under s.448 (earlier s.271C), and a 30% disallowance of the underlying expense under s.35(b)(i) (earlier s.40(a)(ia)). Each layer is assessed separately, so the total can exceed the TDS itself several times over.

A late return adds the s.427, Income-tax Act 2025 fee (earlier s.234E, Income-tax Act 1961) at ₹200 per day, capped at the TDS amount for the period.

  • • Interest — 1% per month (non-deduction) / 1.5% per month (late deposit), s.398(3) (earlier s.201(1A))
  • • Penalty — equal to TDS not deducted or not paid, s.448 (earlier s.271C)
  • • Disallowance — 30% of the expenditure, s.35(b)(i) (earlier s.40(a)(ia))
  • • Late return fee — ₹200 per day, s.427 (earlier s.234E), capped at the TDS amount

Government fees

Fee breakdown

ItemFeeNotes
E-filing or notice responseNilThe filing itself is usually fee-free, but late filing can attract fee or interest.
Statutory fee or taxAs applicableAny tax, interest, or appeal fee depends on the exact route.

Timeline

Typical turnaround

Typical timeline usually means a monthly turnaround, assuming documents are complete and any board or shareholder approvals are already in place.

Pricing note

Fees can vary by filing type, entity class, and whether the work includes a reply, appeal, or connected computation.

Related services

Keep the company moving

TDS Return Filing

File TDS returns (Form 140, 138; earlier 26Q, 24Q) quarterly to avoid default interest under s.398, Income-tax Act 2025 (earlier s.201, Income-tax Act 1961).

ITR for Pvt Ltd

File ITR-6 annually — the income tax return for all Pvt Ltd companies.

Form 15CA/15CB

Certify foreign remittances above ₹5 lakh with a CA's Form 15CB before remitting.

TDS challan deposit

Monthly TDS deposit — due the 7th of the following month (Rule 218; earlier Rule 30).

s.398(3) interest (earlier s.201(1A))

1%–1.5% per month interest for TDS deducted but not deposited on time.

s.448 penalty (earlier s.271C)

Penalty equal to the TDS not deducted or not paid.

FAQ

Frequently asked questions

What is the due date for depositing TDS?
Under s.397(3)(a), Income-tax Act 2025 (earlier s.200, Income-tax Act 1961) read with Rule 218 of the Income-tax Rules 2026 (earlier Rule 30, Income-tax Rules 1962), TDS deducted during a month must be deposited by the 7th of the following month, and March deductions by 30 April. The deposit date is separate from the quarterly return date — both can be missed independently.
What interest is charged if TDS deposit is delayed?
Section 398(3), Income-tax Act 2025 (earlier s.201(1A), Income-tax Act 1961) charges 1% per month for failure to deduct TDS, and 1.5% per month where TDS was deducted but not deposited on time. Interest runs from the date the deduction was due until the payment is actually made.
What is the difference between Section 194C and Section 194J rates?
Section 393(1) Table Sl. 6(i), Income-tax Act 2025 (earlier s.194C, Income-tax Act 1961) applies to contractor and sub-contractor payments at 1% for individuals or HUFs and 2% for others. Sl. 6(iii) of the same Table (earlier s.194J) applies to professional or technical fees at 10% generally, and 2% for specified technical services and royalty-type payments. Labour-charge contracts under Sl. 6(i) and fee-for-service arrangements under Sl. 6(iii) are the usual classification fight.
What is the threshold below which Section 194C TDS is not deducted?
Under s.393(1) Table Sl. 6(i), Income-tax Act 2025 (earlier s.194C, Income-tax Act 1961), no deduction is required for a single payment up to ₹30,000, or where the aggregate payments during the year do not exceed ₹1,00,000. Once either threshold is crossed, the entire qualifying payment becomes subject to deduction.
What happens if a company fails to deduct TDS?
Beyond interest under s.398(3), Income-tax Act 2025 (earlier s.201(1A), Income-tax Act 1961), s.448 (earlier s.271C) imposes a penalty equal to the TDS not deducted or not paid, and s.35(b)(i) (earlier s.40(a)(ia)) disallows 30% of the related expenditure in the company's own computation. The disallowance is removable if the TDS is paid in the year the expenditure is claimed, but the penalty route still runs.
Can a company get approval to deduct TDS at a lower rate?
Yes — under s.395(1), Income-tax Act 2025 (earlier s.197, Income-tax Act 1961), the payee can apply to the Assessing Officer for a lower-deduction certificate when the deductee's tax liability is below the statutory rate. The certificate must be obtained before the payment; it cannot be used to justify past deductions.
Are the Income-tax Act 1961 section references on this page still current after the Income-tax Act 2025?
This page cites the Income-tax Act 2025, in force from 1 April 2026, with the earlier Income-tax Act 1961 section shown alongside (for example s.392 for salary TDS, earlier s.192). The 1961 Act continues for proceedings and penalties for tax years beginning before 1 April 2026 — s.536(2)(c),(d), Income-tax Act 2025.

Canonical reference: https://www.pvtltd.co/services/tds-compliance

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