TDS on payments, filing TDS returns, and avoiding common mistakes that trigger notices from the income tax department.
TDS compliance trips up many small businesses. Wrong rates, missed deductions, or late filing can trigger notices and interest. Here's what you need to get right.
When to Deduct TDS
Deduct TDS when making payments above threshold: rent (₹2.4L/year), professional fees (₹30K/year), contract payments (₹30K/single, ₹1L/aggregate), commission, interest, etc. Rates vary: 10% for rent, 10% for professional fees, 1–2% for contracts. Check the applicable section.
TAN and Registration
You need a TAN (Tax Deduction Account Number) to deduct and deposit TDS. Apply online via the e-filing portal. Without TAN, you cannot file TDS returns.
Deposit and Filing
Deposit TDS by 7th of next month (April–Feb). For March, by 30th April. File 24Q (salaries), 26Q (non-salary), 27Q (non-resident) quarterly. Due dates: 31st May, 31st July, 31st Oct, 31st Jan.
Issue TDS Certificates
Form 16 for employees by 15th June. Form 16A for others within 15 days of return filing. Deductees need these to claim credit. Late or wrong certificates cause problems for them and reflect poorly on you.
Common Mistakes
- •Wrong TDS rate—use the correct section and rate
- •Wrong PAN of deductee—causes credit mismatch
- •Depositing under wrong challan—select correct section code
- •Not filing nil returns when no TDS was deducted
Set up a TDS calendar. Many businesses use payables software that auto-calculates TDS and generates returns. Worth the investment.
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