Overview
Tax deducted at source (TDS) and tax collected at source (TCS) require the payer or seller to deduct or collect tax at the time of payment or receipt, deposit it with the government, file quarterly statements and issue certificates.
Errors in TDS lead to interest, late fees, defaults on TRACES and, more importantly, disallowance of the related expense in the income tax computation. Regular reconciliation keeps the TAN account clean.
Who needs this service
Legal and regulatory framework
- Income-tax Act, 2025 (Tax Year 2026-27 onwards) and Income-tax Act, 1961 for earlier periods
- Income-tax Rules: forms 24Q, 26Q, 27Q, 27EQ and related
- TRACES procedures
Scope of services
Deduction and deposit
- Applicability, section and rate for each type of payment
- Lower deduction and PAN-related higher rate checks
- Monthly deposit through challans
Returns and certificates
- Quarterly statements 24Q, 26Q, 27Q and 27EQ
- Form 16 and Form 16A / 27D
- Correction statements
Reconciliation and defaults
- Reconciliation of books with TRACES and Form 26AS
- Resolution of short deduction, short payment and late filing defaults
- Justification reports
Certificates for lower deduction
- Applications for lower or nil deduction certificates for recipients
How the engagement works
- Set-upTDS matrix for all payment types.
- MonthlyReview of payments, deduction and deposit by the 7th.
- QuarterlyReturns and certificates.
- AnnualReconciliation and default clean-up.
Documents typically required
Key forms and due dates
| Item | Timeline |
|---|---|
| Deposit of TDS/TCS | 7th of the following month (TDS for March: 30 April) |
| TDS returns (24Q, 26Q, 27Q) | 31 July, 31 October, 31 January, 31 May |
| TCS return (27EQ) | 15 July, 15 October, 15 January, 15 May |
| Form 16 | 15 June |
| Form 16A | Within 15 days of the return due date |
Deliverables
- Monthly deposit schedule and challans
- Quarterly returns and certificates
- Reconciliation and default resolution report
The scope of each engagement is agreed in writing and depends on the nature, size and regulatory requirements of the entity.
Frequently asked questions
What is the interest for late deposit of TDS?
Interest applies for each month or part of a month of delay, at a higher rate where tax was deducted but not deposited.
What is the late fee for delayed TDS returns?
₹200 per day until the return is filed, subject to the amount of TDS; a penalty may also apply.
Can a TDS return be corrected?
Yes, through a correction statement on TRACES.
What happens if TDS is not deducted?
Apart from interest, a part of the expense may be disallowed in the income tax computation until the tax is paid.