TDS Filing by Business Owners for AY 2026-27

For Indian businesses, timely TDS deduction, payment and return filing is essential during FY 2025-26, corresponding to AY 2026-27. A missed TDS deposit or incorrect quarterly statement can lead to interest, late filing fees, penalties, disallowance of expenses and difficulties for employees or vendors claiming credit in Form 26AS.

This guide explains the filing of TDS by a business owner in AY 2026-27, including TDS payment due dates, quarterly return deadlines, Form 24Q and Form 26Q filing, TRACES compliance, TDS certificates and consequences of delay.

TDS filing by business owners for AY 2026-27: Key dates

Business owners should track two separate deadlines:

1. The date for depositing TDS with the Government
2. The date for filing the quarterly TDS return

The financial year is FY 2025-26, from 1 April 2025 to 31 March 2026. The related assessment year is AY 2026-27.

TDS payment due dates for business owners for FY 2025-26

For most non-government deductors, TDS deducted during a month must be deposited by the 7th day of the following month. TDS deducted in March must generally be deposited by 30 April 2026.

Month in which TDS is deducted	Normal payment due date
April 2025	7 May 2025
May 2025	7 June 2025
June 2025	7 July 2025
July 2025	7 August 2025
August 2025	7 September 2025
September 2025	7 October 2025
October 2025	7 November 2025
November 2025	7 December 2025
December 2025	7 January 2026
January 2026	7 February 2026
February 2026	7 March 2026
March 2026	30 April 2026

A business owner should not wait until the quarterly TDS return deadline to pay TDS. TDS payment and TDS return filing are separate compliance requirements.

Payments made under specific provisions can have different deadlines. For example, TDS deducted on the purchase of immovable property under Section 194-IA is generally deposited through Form 26QB within 30 days from the end of the month in which the deduction is made.

The Income Tax Department provides information on TDS payment and compliance through its official TDS resources.

TDS return due dates for FY 2025-26

Most businesses file TDS statements every quarter. The applicable due dates for TDS return filing for FY 2025-26 are as follows:

Quarter	Period covered	TDS return due date
Q1	April to June 2025	31 July 2025
Q2	July to September 2025	31 October 2025
Q3	October to December 2025	31 January 2026
Q4	January to March 2026	31 May 2026

These dates generally apply to quarterly statements such as:

• Form 24Q for TDS deducted from salaries
• Form 26Q for TDS deducted from payments other than salaries to Indian residents
• Form 27Q for TDS deducted from payments to non-residents

The fourth-quarter return is particularly important because it contains the final salary details and supports the issue of annual TDS certificates.

Form 24Q salary TDS return filing for FY 2025-26

Employers must file Form 24Q when they deduct TDS from salary payments under Section 192. The return includes details such as:

• Employee PAN
• Salary paid during the quarter
• Taxable salary
• TDS deducted and deposited
• Tax regime selected by the employee
• Details of exemptions, deductions and tax rebates considered
• Challan details

Employers should reconcile Form 24Q with their payroll records before filing. Errors in salary, PAN, tax deducted or challan details can prevent employees from receiving the correct TDS credit.

For the last quarter, employers must report the employee’s annual salary and total TDS for the financial year accurately. The fourth-quarter Form 24Q is due by 31 May 2026.

Form 26Q TDS return filing for AY 2026-27

Businesses use Form 26Q to report TDS deducted from payments made to resident deductees, except salary payments. Common transactions reported in Form 26Q include:

• Contractor and subcontractor payments under Section 194C
• Professional and technical service fees under Section 194J
• Commission or brokerage under Section 194H
• Rent under Sections 194-I or 194-IB, where applicable
• Interest other than interest on securities under Section 194A
• Purchase of goods under Section 194Q, where applicable
• Payments to e-commerce participants under Section 194-O

The business must report each deductee’s PAN, amount paid or credited, TDS rate, TDS amount, challan details and the date of deduction.

A business should use Form 27Q, rather than Form 26Q, when it deducts TDS from payments to a non-resident. The correct form depends on the nature of the payment and the residential status of the recipient.

Who must deduct TDS as a business owner?

TDS liability depends on the nature of the payment, the recipient, applicable threshold and the status of the payer. A business may need to deduct TDS from payments to employees, contractors, professionals, landlords, commission agents, suppliers and other recipients.

Businesses commonly covered by TDS provisions

TDS compliance may apply to:

• Companies and limited liability partnerships
• Partnership firms
• Trusts and societies
• Government departments
• Proprietorships and Hindu Undivided Families
• Individuals or HUFs whose accounts are subject to tax audit
• Other persons making specified payments covered by the Income Tax Act

A proprietorship or individual is not automatically required to deduct TDS on every business payment. For several provisions, the payer’s turnover or tax-audit status in the preceding financial year matters.

However, specific provisions can apply even when the payer is not subject to tax audit. For example, Section 194M can cover certain payments made by an individual or HUF to a resident contractor, commission agent or professional when the annual aggregate exceeds the prescribed threshold.

Before making a payment, the business should identify:

1. The applicable TDS section
2. The threshold limit
3. The applicable rate
4. Whether the recipient is resident or non-resident
5. Whether the recipient has provided a valid PAN
6. The date on which TDS must be deducted
7. The correct payment and return form

The Income Tax Department’s TDS rate information should be checked for the applicable provision and rate.

When should a business deduct TDS?

Under the general rule, TDS is deducted at the earlier of:

• The time of credit of the amount to the recipient’s account, or
• The time of payment by cash, cheque, draft or any other mode

A credit to a suspense account can also be treated as a credit to the recipient in certain situations. Therefore, a business should not assume that TDS applies only when it makes the actual bank payment.

Example: professional fee

Suppose a company records a professional fee of ₹60,000 payable to a resident consultant on 20 June 2025 and pays it on 15 July 2025. If the applicable TDS provision requires deduction at the time of credit or payment, whichever is earlier, the company should deduct TDS when it records the credit on 20 June 2025.

The deducted amount should then be deposited by 7 July 2025, subject to the applicable payment rules.

Step-by-step quarterly TDS return filing process for businesses

Businesses usually file TDS statements electronically using approved return preparation software or a tax professional’s utility.

Step 1: Collect transaction and deductee information

Maintain a monthly record of:

• Date of payment or credit
• Nature of payment
• Section under which TDS applies
• Gross amount
• TDS rate and amount
• Date of deduction
• Date of deposit
• Challan serial number
• BSR code or other challan details
• Deductee PAN
• Lower or nil deduction certificate details, if applicable

Step 2: Deposit TDS

Pay the deducted TDS through the authorised income tax payment facility. Use the correct minor head, assessment year and challan details.

For FY 2025-26, businesses should ensure that the payment is linked to the relevant year and that the challan amount matches the TDS liability recorded in the books.

Step 3: Prepare the quarterly statement

Prepare the appropriate statement:

• Form 24Q: Salary TDS
• Form 26Q: Resident non-salary payments
• Form 27Q: Non-resident payments

The statement should contain correct PAN details. A wrong or invalid PAN can result in higher TDS requirements and an incorrect credit for the deductee.

Step 4: Validate the file

Validate the prepared statement using the File Validation Utility or the utility prescribed for the applicable filing process. Correct all validation errors before submission.

Common errors include:

• Incorrect challan number
• Wrong assessment year
• Invalid PAN
• Mismatch between TDS amount and challan amount
• Incorrect section code
• Duplicate deductee entries
• Incorrect date format
• Wrong residential status

Step 5: Submit the return electronically

Submit the validated statement through the authorised portal or intermediary. Keep the acknowledgement number and submission records safely.

Step 6: Check processing status

After filing, check whether the statement has been accepted, processed or marked for correction. A return that has been uploaded is not necessarily free from defaults.

TDS return filing on the TRACES portal

TRACES, or the TDS Reconciliation Analysis and Correction Enabling System, is used by deductors, deductees and tax authorities for TDS-related services.

A business can use the TRACES portal to:

• View TDS statements and defaults
• Download Form 16 and Form 16A
• Download consolidated TDS files
• Request conso files for correction statements
• Check challan status
• View justification reports
• Download Form 26AS-related information, where available
• Track certificates and correction requests

TRACES is especially important after filing a quarterly statement. The deductor should review the default summary for:

• Short deduction
• Short payment
• Late deduction
• Late payment
• Late filing fee
• PAN errors
• Interest liability
• Challan mismatch

If an error appears, the business may need to file a correction statement after obtaining the relevant consolidated file.

TDS certificates: Form 16 and Form 16A for AY 2026-27

TDS certificates help employees and other recipients claim credit for tax deducted.

Form 16 for salary TDS

An employer issues Form 16 to an employee for salary TDS. Form 16 contains:

• Salary income
• Exempt allowances, where relevant
• Deductions considered by the employer
• Taxable income
• TDS deducted
• TDS deposited
• Details reported in the salary return

For FY 2025-26, employers generally need to issue Form 16 by 31 May 2026, after filing the fourth-quarter salary TDS statement.

The employee should compare Form 16 with:

• Salary slips
• Annual Information Statement
• Form 26AS
• Income tax return records

Form 16A for non-salary TDS

Businesses issue Form 16A for TDS deducted from non-salary payments. The certificate is downloaded from TRACES and issued quarterly.

The usual Form 16A issue deadlines are:

Quarter	Period	Form 16A issue deadline
Q1	April to June 2025	15 August 2025
Q2	July to September 2025	15 November 2025
Q3	October to December 2025	15 February 2026
Q4	January to March 2026	15 June 2026

The certificate should reflect the TDS actually reported and processed. If the business has filed an incorrect return, it should first complete the correction process before issuing a revised certificate.

Late filing fees and penalties for TDS returns

Delay in TDS compliance can create multiple liabilities.

Interest for late deduction or late payment

Interest may apply as follows:

• 1% per month or part of a month for delay in deducting TDS
• 1.5% per month or part of a month for delay in depositing TDS after deduction

The interest calculation generally counts each month or part of a month. Even a short delay can therefore result in a full month being counted for the relevant period.

Late filing fee under Section 234E

A late filing fee of ₹200 per day may apply for delay in filing the quarterly TDS statement. The fee cannot exceed the amount of TDS deductible or collectible for that statement period.

For example, if a business files a quarterly statement 10 days late and the TDS reported for the quarter is ₹40,000, the late filing fee can be ₹2,000, subject to the statutory limit.

Penalty under Section 271H

A penalty of ₹10,000 to ₹1,00,000 may apply for failure to file a TDS statement or for filing an incorrect statement. The exact consequences depend on the facts and statutory conditions.

A delay should not be ignored merely because the late filing fee has been paid. The business must still file the pending statement and correct any default.

Expense disallowance

In certain cases, failure to deduct or deposit TDS can result in partial disallowance of the related expenditure while computing business income. The disallowance rules can differ based on the type of payment and the timing of subsequent compliance.

The business should review the relevant provisions under the Income Tax Act and official tax laws before finalising its tax computation.

Practical example of TDS compliance

A business makes the following payments during July 2025:

• Contractor payment: ₹2,00,000
• Professional fee: ₹80,000
• Office rent: ₹1,20,000
• Salary payments: ₹6,00,000

The business should:

1. Check the relevant TDS provisions and thresholds.
2. Obtain the PAN of each recipient.
3. Deduct TDS at the applicable rate when crediting or paying the amount.
4. Deposit the TDS by 7 August 2025, unless a different rule applies.
5. Report salary TDS in Form 24Q.
6. Report resident non-salary TDS in Form 26Q.
7. Issue the applicable TDS certificates.
8. Reconcile the return with the books, challans and TRACES defaults.

The business should not combine all payments into one generic TDS category. Correct section selection affects the rate, reporting code and the recipient’s tax credit.

Common questions about TDS filing by business owners

Is TDS return filing mandatory if no TDS was deducted?

A quarterly TDS statement is generally required when the deductor has made payments subject to TDS and deducted tax. If there was no TDS liability or no relevant payment during the quarter, the business should evaluate whether a statement is required based on the applicable rules and portal requirements.

Businesses should maintain records supporting the conclusion that no TDS was deductible.

Can a business file one annual TDS return instead of quarterly returns?

For regular salary and non-salary TDS compliance, businesses generally file quarterly TDS statements. They should not wait until the end of the financial year to report deductions.

Certain special provisions, such as specified property or professional payments by individuals, use separate challan-cum-statement forms rather than regular quarterly statements.

What happens if the recipient does not provide PAN?

TDS may be required at a higher rate under the applicable provisions when the deductee does not furnish a valid PAN. The business should collect and verify PAN before making payments and preserve the supporting records.

Can a TDS return be revised?

Yes. A deductor can generally file a correction statement to correct errors such as:

• Incorrect PAN
• Wrong TDS amount
• Incorrect challan details
• Deductee omission
• Wrong section code
• Incorrect date of deduction

The correction should be filed promptly because it may be necessary for the deductee to receive proper TDS credit.

Is GST included when calculating TDS?

The treatment of GST depends on the applicable TDS provision and how the invoice is structured. Under several common TDS provisions, GST shown separately may be excluded from the amount on which TDS is deducted, subject to the conditions and rules applicable to that payment.

The business should review the specific provision instead of applying one rule to every invoice.

TDS compliance checklist for FY 2025-26

Use this checklist every month and quarter:

• Identify all payments subject to TDS.
• Verify the recipient’s PAN and residential status.
• Check thresholds and applicable rates.
• Deduct TDS at the earlier of credit or payment, where applicable.
• Deposit TDS by the prescribed due date.
• Reconcile books with TDS payable ledgers.
• Reconcile challans with the tax payment records.
• Prepare Form 24Q, Form 26Q or Form 27Q.
• Validate and file the quarterly statement.
• Download the processing report and justification report from TRACES.
• Correct defaults promptly.
• Download and issue Form 16 or Form 16A.
• Preserve challans, invoices, payroll records and acknowledgements.

Summary

The filing of TDS by a business owner in AY 2026-27 requires monthly deduction and deposit of tax, quarterly filing of Form 24Q, Form 26Q or Form 27Q, and timely issue of Form 16 or Form 16A. For FY 2025-26, regular quarterly TDS returns are due on 31 July 2025, 31 October 2025, 31 January 2026 and 31 May 2026, while monthly TDS payments are generally due by the 7th of the next month and March deductions by 30 April 2026.

A strong system for TDS deduction and deposit compliance for Indian businesses should include a payment review, PAN verification, challan reconciliation and regular checking of the TRACES portal. Completing these steps on time helps business owners avoid late filing fees, interest, penalties and mismatches in employees’ or vendors’ tax credit for AY 2026-27.