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TDS Compliance for Businesses

TDS Compliances for Business

TDS Compliances for Business

TDS Return Filing and TDS Compliances for Business – TDS (Tax Deducted at Source) is a concept introduced by the Income Tax Department where any individual/entity or body corporate making any payment becomes liable to deduct some amount from the total payment as TDS and deposit it to the Central Government bank account. The main logic behind introducing such a concept is to bring all unorganized transactions to the department’s purview.
As per Income Tax Act, 1932 – the provisions of TDS do not apply to all transactions. Some special provisions are there for TDS deduction and its submission to the department. For entities or Individuals who are specified to deduct TDS, there are different TDS rates as per the purpose of the transaction defined in the law.

Transactions on which TDS is deducted:

Some common reasons for deducting TDS by a business can be:

  1. For payment of Salaries / Commission / Brokerage
  2. For payments of any immovable property.
  3. For payment from one e-commerce operator to another e-commerce operator.
  4. For payment related to the transfer of Digital Assets
  5. For payments of Dividends / Interest / Winnings
  6. For payment of rent / professional fees/ perquisites.
  7. For payment of investment gains or any other income.

Every entity that is required to deduct TDS for the above reasons, after depositing has to file a TDS Return. This is required to make it eligible for the deductee to claim the amount of deduction from the Income tax department through Form 26AS or the TDS certificate issued by the deductor.

Essential TDS Compliances for Business :

Once a required amount of TDS is deducted, then as per Section 200 of the Income Tax Act, it becomes the duty of the deductor to file a TDS Return for the deposits so made to the Government. In the list of TDS Compliance, a deducting entity is required to do:

TDS Compliance Returns are filed every quarter :

TDS Compliance Period TDS Return Filing Due Dates
April to June (1st Quarter) 31st July
July to September (2nd Quarter) 31st October
October to December ( 3rd Quarter) 31st January
January to March (4th Quarter) 31st May

Forms for TDS Compliances for Business

TDS Deduction is to be done by the paying authority while making payment to the beneficiary. Like in the case of Salaries or other perquisites paid to an employee, the paying authority i.e the employer will be responsible for filing TDS Returns.

The following TDS forms are to be used for reporting and filing TDS compliances:

  1. Form 24Q – Form specifically used by employers or business units for reporting of TDS deducting on recurring transactions in business like payment of Salaries / Commission / Brokerage etc.
  2. Form 26Q – The form is used for reporting transactions other than Salary deductions.
  3. Form 27 EQ – Form for reporting of Tax collected at Source.
  4. Form 27A – Filing Return of TDS.
  5. Form 16 /Form 16A – TDS Certificate issued after TDS deduction.
  6. Challan No. ITNS 281 – TDS Payment Challan for entities deducting TDS.

TDS Compliance Filing process for Business :

TDS is a steady source of revenue for the Government. While there is no compulsion to make the entire payment of TDS in one go, the deducting entity can make payments in quarterly installments and file returns for every deposit made. The TDS compliance process goes in the following way for entities:

  • Obtain TAN (Tax Deduction Account Number ) /PAN (Permanent Account
    Number ) for the entity
  • Deduct the required amount of TDS (Section 192 to Section 196 ).
  • Make payment to Government Bank Account through TDS Challan
  • Prepare TDS Return with the Acknowledgment received on payment through
    challan and deductor/deductee details.
  • File TDS Return online on the E-TDS/E-TCS Portal.

Non Compliance with TDS provisions :

For negligence or any delay in filing TDS returns there are strict penal provisions from the department.

  1. For non-deduction of TDS – Interest @ 1% on monthly basis will be charged for non-deduction.
  2. For non-payment of TDS – Interest @ 1.5% on monthly basis shall be charged on the deduction amount.
  3. For non-filing/ delayed return (Section 234E) – Fine of Rs 200 / day basis up to a maximum of Rs 5000/- for non-filing or delayed filing of TDS return.
  4. For non-compliance with TDS rules – If the Assessing officer so believes the entity or the TDS deducting authority in contradiction of any of the TDS rules, he might impose a penalty of Rs 10,000/- which can be even Rs 1 lakh.

Why TaxReturnWala for TDS Compliances of Business?

TDS E-filing and compliance with all TDS Rules are necessary for every business entity. Preparation of TDS Returns and their quarterly filing can be hectic for entrepreneurs. TDS Filing experts there at TaxReturnWala, help you outsource all your TDS compliance worries with no major documentation required.

Our experts guide you on each aspect of handling processes of TDS Compliance for Business. For consultation required on TDS Compliance filing, you can reach us at


Where can TDS Returns be filed?

TDS Returns can be filed on the TIN -FCs facility of NSDL. PAN/TAN of the entity deducting TDS shall be required to file the TDS Returns.

Can TDS Return be rectified/revised?

Yes, TDS Returns can be rectified or revised. You can rectify the particulars, the PAN TAN of the deductor or the deductee or you can also file an entire new TDS return with all original documents.

My previous TDS return was rejected on TIN-FC, what should I do?

TDS returns require proper mention of TDS amount deduction under different sections and particulars of both deductor and deductee. In case, your return is rejected you can consult our TDS filing expert for the probable solutions at