1. Primary Responsibilities of Deductor
- Tax Deduction at Source:
- Must deduct correct % as per Income Tax Act
- Must deduct at the time of payment/credit(whichever is earlier)
- No deduction required if payee submits valid lower/NIL deduction certificate (u/s 197)
- Deposit to Government:
- Deposit TDS amount by 7th of next month(except March: due by 30th April)
- Late payment attracts 5% monthly interest(u/s 201(1A))
2. TDS Return Filing
| RETURN TYPE | FORM | DUE DATE |
| Salaries | 24Q | Quarterly (31st July/31st Oct/31st Jan/31st May) |
| Non-Salaries | 26Q | Same as above |
| NRI Payments | 27Q | Same as above |
| TCS | 27EQ | Same as above |
- Late Filing Fees:
- ₹200/day (u/s 234E) until filing
- Maximum: Up to TDS amount
3. TDS Certificate Issuance
| CERTIFICATE TYPE | FORM | DUE DATE |
| Salaries | 16 | 15th June |
| Non-Salaries | 16A | 15 days from return due date |
| TCS | 27D | 15 days from return due date |
4. Record Keeping Requirements
- Maintain for 7 years:
- Payment vouchers
- TDS calculation sheets
- PAN records of deductees
- Correspondence with tax authorities
5. Penalties for Non-Compliance
| DEFAULT | PENALTY |
| Failure to deduct | Equal to TDS amount + interest |
| Late deduction | 1% monthly interest |
| Late payment | 1.5% monthly interest |
| Incorrect filing | ₹10,000-₹1 lakh (u/s 271H) |
| Willful evasion | Prosecution (u/s 276B) |
6. Special Cases
- Government Deductors:
- Must deposit TDS without challan(book adjustment)
- File returns through DDO system
- Non-Resident Payments:
- Additional compliance under Section 195
- May require Form 15CA/CBfor remittances
7. Digital Compliance (2023 Updates)
- Mandatory E-paymentfor all deductors
- TRACES Portalfor:
- Return filing
- Certificate download
- Default resolution
- New AIS-TDSfor reconciliation
8. Best Practices for Deductors
- Monthly Reconciliation:
-
- Match books with 26AS entries
- Identify mismatches early
- PAN Validation:
-
- Verify deductee PANs before deduction
- Avoid 20% higher TDS (u/s 206AA)
- Quarterly Review:
-
- Check applicability of new TDS provisions
- Update systems for rate changes
- Professional Certification:
-
- CA certification recommended for large deductors
- Internal audit of TDS processes
Pro Tip: Use the NSDL E-Gov TDS Reconciliation Analysis and Correction Enabling System (TRACES) for seamless compliance and error resolution.
