Mandatory TDS Returns: Due Dates, Penalties & FAQs for FY 2025-26

Tax Deducted at Source (TDS) is one of the most important compliance mechanisms under the Indian Income Tax Act, 1961. It ensures that tax is collected at the point of income generation and deposited with the government on a real-time basis. Every person or entity responsible for making specified payments, such as salary, rent, professional fees, interest, commission, etc., is required to deduct TDS, deposit it within prescribed timelines, and file quarterly TDS returns without fail.

This article is prepared for publication on taxcellent.in and provides a complete guide on mandatory quarterly TDS returns, applicable sections, the latest TDS rates for FY 2025 – 26 (AY 2026 – 27), due dates, penalties, and FAQs.

What is TDS (Tax Deducted at Source)?

TDS is a system where the payer (deductor) deducts a certain percentage of tax before making payment to the payee (deductee) and deposits the same with the Income Tax Department on behalf of the payee. The deducted amount is reflected in the deductee’s Form 26AS and can be claimed as a credit while filing the income tax return.

Objectives of TDS

• Regular inflow of revenue to the Government
• Prevention of tax evasion
• Widening of tax base
• Easy tax collection at source

Who is Required to Deduct TDS?

TDS provisions apply to:

• Companies, LLPs, Firms
• Individuals C HUFs (subject to tax audit or specified sections)
• Employers
• Government C Non-Government Deductors

Any person having a TAN (Tax Deduction Account Number) and making payments covered under TDS sections must deduct and comply with TDS provisions.

Mandatory Filing of Quarterly TDS Returns

Filing of TDS return is mandatory for all quarters, even if no tax is deducted (Nil Return in applicable cases). TDS returns must be filed quarterly using prescribed forms based on the nature of payment.

Forms for TDS Returns

• Form 24Q – TDS on Salary (Section 192)
• Form 26Q – TDS on payments other than salary to residents
• Form 27Q – TDS on payments to Non-Residents
• Form 26QB – TDS on sale of property
• Form 26QC – TDS on rent by Individual/HUF (194IB)
• Form 26QD – TDS under Section 194M
• Form 26QE – TDS on Virtual Digital Assets (194S)

Quarterly TDS Return Due Dates (FY 2025–26)

Section-wise TDS Rates (FY 2025–26)

Below are some of the most commonly applicable TDS sections and rates:

• Section 1G2 – Salary: As per applicable slab rates
• Section 1G4A – Interest (Bank/Post Office): 10%
• Section 1G4C – Contractor Payments: 1% (Individual/HUF), 2% (Others)
• Section 1G4H – Commission/Brokerage: 2%
• Section 1G4I – Rent
  • Plant C Machinery: 2%
  • Land/Building/Furniture: 10%
• Section 1G4J – Professional/Technical Fees
  • Technical Services/Call Centre: 2%
  • Professional Services: 10%
• Section 1G4Q – Purchase of Goods: 1%
• Section 1G4R – Benefits/Perquisites: 10%
• Section 1G4S – Virtual Digital Assets (Crypto): 1%

(If PAN is not provided, higher TDS @ 20% may apply under Section 206AA).

Due Date for Depositing TDS

• Non-Government Deductor: On or before 7th of the following month
• March Deduction: On or before 30th April

Penalties and Interest for Non-Compliance

Failure to deduct, deposit, or file TDS returns attracts severe consequences:

Interest (Section 201(1A))

• 1% per month – delay in deduction
• 5% per month – delay in deposit

Late Filing Fee (Section 234E)

• ₹200 per day (maximum up to TDS amount)

Penalty (Section 271H)

• ₹10,000 to ₹1,00,000 for non-filing or incorrect filing

Disallowance of Expense (Section 40(a)(ia))

• 30% of expense disallowed if TDS not deducted/paid

Frequently Asked Questions (FAQs)

Q1. Is filing TDS return mandatory even if no TDS is deducted?

Yes, filing of TDS return is mandatory in applicable cases. Nil return may be required.

Q2. How many TDS returns are to be filed in a year?

Four quarterly TDS returns must be filed for every financial year.

Q3. What happens if PAN is not provided by deductee?

TDS will be deducted at a higher rate of 20% under Section 206AA.

Q4. Can TDS return be revised after filing? 

Yes, correction statements can be filed to rectify errors through the TRACES portal.

Q5. What is TAN and is it mandatory? 

TAN (Tax Deduction Account Number) is mandatory for all deductors except in specified cases like 194IA, 194IB, and 194M.

Conclusion

TDS compliance is not optional, it is a statutory obligation. Timely deduction, deposit, and filing of quarterly TDS returns for all quarters helps avoid penalties, interest, and litigation. Businesses and individuals must stay updated with applicable sections, rates, and due dates to ensure seamless compliance.

For professional assistance in TDS filing, return preparation, and compliance, Connect with Taxcellent.in – your trusted tax compliance partner.