How to Get TDS Compliance in India
TDS compliance is a critical obligation for any Indian business making payments to vendors. Under the Income Tax Act of India, deducting tax at source ensures that income received from contractors or employees is taxed correctly before payment. Failure to comply can result in heavy penalties and interest charges under Section 201(1A) and Rule 37C. This guide outlines the exact process for obtaining a TAN (Tax Deduction Account Number), filing quarterly returns, and issuing Form 16/16B certificates. With PNPC Global's expertise since 1986, we simplify this regulatory burden so you can focus on growth while staying fully compliant with Indian tax laws. The following steps cover the entire lifecycle of TDS management in India for fiscal year 2025-26 and beyond.
Before you start
- Valid PAN Card for the deductor
- Active current bank account linked to your business entity
- Digital Signature Certificate (DSC) or Aadhaar-based e-sign access
Step-by-step
Obtain TAN Registration
Apply for a Tax Deduction Account Number by submitting Form 49B online through the NSDL/TIN-NSDL portal. You must provide your PAN, business details, and bank account information along with prescribed fees of ₹50.
Understand Section & Thresholds
Identify which sections under Chapter IV-B apply to you (e.g., Section 194C for contractors or Section 194J for professional services). Note that TDS is mandatory only if payments exceed the specific threshold limits set by the Central Board of Direct Taxes.
Calculate Deduction & Deposit
Deduct tax at applicable rates from your payment to vendors. Ensure this amount is deposited into the government's Consolidated Fund via challan ITNS-281 within seven days after the end of each month.
File Quarterly Returns
Submit quarterly TDS returns using Form 24Q (for salary) or Form 26QB/27 series via the GST Portal. This must be done by the 30th day of May, July, September, and January following each quarter.
Issue TDS Certificates
Generate and issue Form 16 to employees or Form 16B/16C for contractors. These certificates must be sent electronically via the portal within fifteen days of filing the quarterly return.
Common mistakes to avoid
- Failing to deposit TDS by the due date, leading to interest charges under Section 201(1A).
- Incorrectly calculating tax rates or missing threshold limits for specific sections.
- Not issuing Form 16/16B within 15 days of filing returns.
Frequently asked questions
Can I file TDS without a DSC?
Yes, you can use Aadhaar-based e-signature for authentication on the GST Portal to file TDS returns and issue certificates in FY 2026.
What is the penalty for late filing of Form 24Q?
A late fee under Section 234F applies, which can range from ₹100 to ₹50 per day depending on your turnover and delay duration.
How do I correct a wrong TDS entry?
You must file Form 26QB or the relevant correction form with an explanation statement before filing the next quarterly return to rectify errors.
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