TDS Filing for Retailers: AY 2026-27 Due Dates & Rules

ITAI Blogger

August 29, 2026

For retail businesses, TDS compliance does not end with deducting tax from a payment. A retailer must identify the correct TDS section, deduct tax at the applicable rate, deposit it on time, file the correct quarterly statement and issue TDS certificates to the deductees. This guide explains filing of TDS by retail business owners in AY 2026-27, covering FY 2025-26 due dates, applicable sections, Form 26Q and the latest Section 194Q rule for purchases of goods.

TDS Filing for Retail Business Owners AY 2026-27

A retail business generally deducts TDS when it makes specified payments such as contractor bills, professional fees, commission, rent, interest or purchases of goods that meet the conditions under Section 194Q.

The main compliance steps are:

Obtain a Tax Deduction and Collection Account Number (TAN), wherever required.
Identify whether the payment attracts TDS.
Check the threshold and applicable rate.
Collect the payee’s PAN and verify the details.
Deduct TDS at the time of credit or payment, depending on the relevant section.
Deposit the TDS with the Central Government within the prescribed due date.
File the quarterly TDS statement.
Download and issue Form 16A or another applicable TDS certificate.

A retailer may need to file Form 26Q for payments made to resident contractors, professionals, commission agents, landlords and other resident payees. Salary TDS is reported in Form 24Q, while payments to non-residents generally require Form 27Q.

The Income Tax Department provides official information on TDS provisions, forms and compliance.

TDS Return Due Dates for Retailers FY 2025-26

Retailers must file TDS statements every quarter. The due dates for TDS return filing for FY 2025-26, relevant to AY 2026-27, are as follows:

Quarter	Period covered	TDS payment due date for March	TDS return due date
Q1	April to June 2025	7 July 2025	31 July 2025
Q2	July to September 2025	7 October 2025	31 October 2025
Q3	October to December 2025	7 January 2026	31 January 2026
Q4	January to March 2026	30 April 2026	31 May 2026

Monthly TDS deposit deadlines

For payments made from April to February, a non-government deductor generally deposits TDS by the 7th day of the following month.

For example:

TDS deducted in April 2025: deposit by 7 May 2025
TDS deducted in September 2025: deposit by 7 October 2025
TDS deducted in February 2026: deposit by 7 March 2026
TDS deducted in March 2026: deposit by 30 April 2026

A retailer should use the applicable challan, normally Challan ITNS 281, for depositing TDS. The tax payment details must match the quarterly statement, including the TAN, assessment year, section code and amount.

You can check government tax deadlines through the Income Tax Department’s official tax calendar.

TDS Sections Applicable to Retail Businesses in India

The following TDS sections commonly apply to retail businesses:

Payment type	Section	Common rate for FY 2025-26	Key threshold or condition
Contractor or sub-contractor payment	194C	1% for individual or HUF contractor; 2% for other contractors	₹30,000 per contract or ₹1,00,000 aggregate in the year
Commission or brokerage	194H	2%	₹20,000 aggregate in a financial year
Professional or technical fees	194J	Generally 10%; technical services may attract 2%	₹50,000 aggregate in a financial year for specified payments
Rent paid to a resident	194-I	2% for plant and machinery; 10% for land, building, furniture or fittings	Monthly rent above ₹50,000
Purchase of goods	194Q	0.1%	Buyer’s preceding-year turnover above ₹10 crores and purchases from a resident seller exceed ₹1 crore
Payments by certain individuals or HUFs	194M	2%	Aggregate contractor or professional payments above ₹50 lakh, subject to conditions
Interest other than securities	194A	Depends on the nature of payer and payee	Threshold varies based on the payer and recipient

TDS rates can change if the payee does not provide a valid PAN. Under Section 206AA, tax may be deducted at the higher of the applicable rate, the rate in force or 20%, subject to the law and applicable exceptions.

Section 194C: TDS on contractor payments by retailers

Retailers commonly pay contractors for:

Store renovation and civil work
Electrical and plumbing work
Housekeeping and security services
Transportation and delivery contracts
Packaging, loading and unloading
Advertising production and other work contracts

Under Section 194C, TDS generally applies when:

The single payment exceeds ₹30,000, or
The aggregate payments to the contractor exceed ₹1,00,000 during the financial year

The usual rates are:

1% when the contractor is an individual or HUF
2% when the contractor is a company, firm, LLP or another person

For example, if a retail store pays a company ₹1,20,000 for interior renovation, it should generally deduct TDS at 2%, resulting in TDS of ₹2,400. The retailer pays ₹1,17,600 to the contractor and deposits ₹2,400 with the government.

Section 194C does not normally apply to payments for purchasing goods as a buyer-seller transaction. However, the contract’s actual substance matters. A composite contract involving labour and materials may require a different analysis.

Section 194H: TDS on commission and brokerage paid by retailers

Retailers may pay commission or brokerage to:

Sales agents
Franchise or distribution agents
Commission-based marketing representatives
Referral agents
Brokers
Online or offline intermediaries

Under Section 194H, the general TDS rate is 2% for FY 2025-26. The threshold is ₹20,000 in aggregate during the financial year.

The rate was reduced from 5% to 2% for payments made from 1 October 2024. Therefore, retailers must apply the correct rate based on the date of credit or payment.

For example, if a retailer credits ₹80,000 as commission to a resident agent in December 2025, TDS at 2% would be ₹1,600, assuming the threshold conditions are met.

Retailers should examine whether a payment described as a discount is actually commission. The commercial arrangement, control over sales, invoicing pattern and contractual terms can determine the correct TDS treatment.

Section 194J: TDS on professional fees paid by retail businesses

Retail businesses often engage professionals for:

Legal services
Accounting and tax consultancy
Audit services
Management consultancy
Information technology services
Technical consultancy
Architectural or design services

Under Section 194J, the general rate is usually 10% for professional services. Certain technical services and specified payments may attract 2%.

For FY 2025-26, the threshold for specified payments under Section 194J has generally increased to ₹50,000 in aggregate during the financial year. The threshold must be checked according to the type of service and the applicable provision.

For example, if a retail company pays ₹75,000 to a resident lawyer for legal services, it would generally deduct TDS at 10%, or ₹7,500.

TDS under Section 194J must not be confused with GST. GST charged separately on an invoice does not automatically form part of the amount on which TDS is deducted. Retailers should follow the applicable income tax rules for the treatment of GST shown separately in the invoice.

Section 194Q TDS on Purchase of Goods Above ₹50,00,000

Many retailers search for Section 194Q TDS on purchase of goods above ₹50,00,000 because ₹50,00,000 was the earlier threshold.

For FY 2025-26, the threshold under Section 194Q has been increased from ₹50,00,000 to ₹1,00,00,000. Therefore, the old ₹50 lakh threshold does not apply for purchases made during FY 2025-26.

Conditions for Section 194Q

A buyer must generally deduct TDS under Section 194Q when all these conditions are satisfied:

The buyer’s total sales, gross receipts or turnover exceeded ₹10 crores in the financial year immediately preceding FY 2025-26.
The purchase is made from a resident seller.
The aggregate value of goods purchased from that seller exceeds ₹1 crore during FY 2025-26.
The transaction is not covered by a specific exclusion under the law.

TDS is deducted at 0.1% on the amount exceeding ₹1 crore. If the seller does not furnish PAN, the higher rate under Section 206AA may apply.

Example of Section 194Q

A large retail chain had turnover of ₹14 crores in FY 2024-25. During FY 2025-26, it purchases goods worth ₹1,40,00,000 from a resident supplier.

The amount exceeding the threshold is:

Total purchases: ₹1,40,00,000
Less threshold: ₹1,00,00,000
Amount subject to TDS: ₹40,00,000
TDS at 0.1%: ₹4,000

The retailer must deduct ₹4,000 and report the transaction in its quarterly TDS statement.

A small retailer whose preceding-year turnover was ₹10 crores or less will generally not be required to deduct TDS under Section 194Q merely because its purchases exceed ₹1 crore.

Interaction with TCS on sale of goods

The Finance Act, 2025 removed the TCS requirement under Section 206C(1H) for sale of goods from 1 April 2025. Section 194Q continues to apply where its conditions are met. Retailers should therefore determine whether they are acting as buyers covered by Section 194Q instead of relying on the earlier buyer-seller TDS and TCS overlap rules.

The Finance Ministry’s Union Budget documents contain the relevant legislative changes for FY 2025-26.

How to File Form 26Q for Retail Business Owners

Form 26Q is the quarterly statement used to report TDS deducted from payments made to resident taxpayers, excluding salary payments.

A retailer should follow these steps:

1. Consolidate payment records

Prepare a quarter-wise list of:

Vendor or contractor name
PAN
Date of credit or payment
Nature of payment
Applicable TDS section
Gross amount
TDS amount
Challan details

2. Validate PAN and deductee details

The name and PAN in the accounting system should match the details registered with the Income Tax Department. Incorrect PANs can lead to higher TDS liability, demand notices and credit problems for the payee.

3. Match TDS with challans

The quarterly statement must contain accurate challan information, including:

BSR code or challan identification details
Date of deposit
Amount deposited
Minor head
Assessment year
TAN

4. Prepare and validate the statement

The retailer or tax professional can prepare the statement using approved return preparation software or the available filing utilities. The file should be validated before submission.

5. Submit the return

The statement can be submitted through the authorised TDS filing mechanism, including the TRACES portal and approved intermediaries.

6. Download Form 16A

After processing, the retailer should download Form 16A and issue it to the deductee within the prescribed period. Form 16A helps the vendor or professional claim TDS credit in the income tax return.

TDS Certificate and Form 16A Due Dates

For non-salary payments reported in Form 26Q, retailers generally issue Form 16A quarterly. The usual due dates are:

Quarter	Form 16A due date
April to June 2025	15 August 2025
July to September 2025	15 November 2025
October to December 2025	15 February 2026
January to March 2026	15 June 2026

The retailer should ensure that the TDS appears correctly in the deductee’s Form 26AS and Annual Information Statement. Errors in the quarterly return can prevent the payee from receiving credit even when the retailer has deposited the tax.

Does Every Retailer Need to Obtain TAN?

A business that is required to deduct TDS under the regular TDS provisions generally needs a TAN. The TAN must be quoted in:

TDS challans
Quarterly TDS statements
TDS certificates
Correspondence relating to TDS

However, certain provisions have separate compliance mechanisms. For example, an individual or HUF covered under Section 194M may deposit TDS through the prescribed challan-cum-statement process instead of following the regular TAN-based quarterly filing process.

Retailers should distinguish between:

A company, LLP or partnership firm carrying on retail business
An individual or HUF retailer
A proprietor whose business is subject to tax audit
A proprietor not subject to tax audit

The identity and tax status of the payer can change the applicable TDS obligation.

Common TDS Mistakes Made by Retailers

Retailers can reduce notices and reconciliation issues by avoiding these common errors:

Applying Section 194C to every vendor invoice without checking whether the payment is for goods or work
Continuing to use the old 5% rate under Section 194H
Applying the old ₹50 lakh Section 194Q threshold for FY 2025-26
Ignoring the buyer’s preceding-year turnover condition under Section 194Q
Deducting TDS on the invoice date even when the legal trigger occurred earlier
Using an incorrect or inactive PAN
Depositing TDS under the wrong section code
Filing Form 26Q with challan mismatches
Failing to deduct TDS from credit notes, advances or year-end provisions where applicable
Not issuing Form 16A after the statement is processed
Treating GST registration as a substitute for TAN registration
Ignoring TDS on rent, professional fees or commission because the payment is made through a current account

Practical TDS Compliance Checklist for FY 2025-26

Before closing each month, a retail business should:

Review all payments made and credited during the month.
Group payments by payee and section.
Check whether the annual threshold has been crossed.
Verify the payee’s PAN.
Deduct TDS at the correct rate.
Deposit the amount by the applicable due date.
Reconcile the ledger with the TDS payable account.
Match challans with the bank payment records.
Track Section 194Q purchases seller by seller.
Prepare the quarterly Form 26Q before the filing deadline.
Download Form 16A after processing.
Correct any rejected or mismatched statement promptly.

What Happens If a Retailer Does Not Deduct or Deposit TDS?

Failure to comply can result in:

Interest for late deduction or late payment
Late filing fee under Section 234E
Penalty for incorrect or delayed statements
Disallowance of certain business expenditure under Section 40(a)(ia)
TDS demand raised against the deductor
Difficulty for the payee in claiming credit

Interest is generally charged for the period between the date on which TDS should have been deducted, the actual deduction date and the payment date. The final liability depends on the specific default.

The Income Tax Act provisions on TDS defaults and interest should be reviewed when calculating the amount payable.

Summary: TDS Filing for Retailers in AY 2026-27

For filing of TDS by retail business owners in AY 2026-27, the most important actions are timely deduction, accurate section selection, monthly deposit and quarterly Form 26Q filing. Retailers should closely review contractor payments under Section 194C, commission under Section 194H, professional fees under Section 194J and rent under Section 194-I. For Section 194Q TDS on purchase of goods above ₹50,00,000, remember that the threshold has increased to ₹1,00,00,000 for FY 2025-26, subject to the buyer’s preceding-year turnover exceeding ₹10 crores. A monthly reconciliation and properly maintained vendor master will make TDS filing for retail business owners AY 2026-27 more accurate and help avoid interest, notices and mismatched TDS credits.

This content is AI Generated, use for reference only.