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Understanding TDS Returns: A Complete Guide

Home / Understanding TDS Returns: A Complete Guide

Understanding TDS Returns: A Complete Guide

Understanding TDS Returns: A Complete Guide


Tax Deducted at Source (TDS) is a critical component of India’s tax framework, ensuring that taxes are collected at the source of income itself. Understanding and complying with TDS regulations is essential for both individuals and businesses to avoid penalties and ensure smooth tax operations. In this guide, we will delve into the intricacies of TDS returns, providing a comprehensive overview of the legal framework, filing procedures and best practices for compliance.

Legal Framework: Understanding TDS Laws in India

TDS laws in India are governed by the Income Tax Act of 1961 and the Income Tax Rules of 1962. These laws mandate the deduction of taxes at the source of income to ensure revenue collection for the government. Various sections of the Income Tax Act specify the rates and conditions for TDS deduction, covering a wide range of income sources.

Obligations of Deductors and Deductees

Deductors, individuals or entities responsible for deducting TDS, have certain obligations under the law. They must deduct the appropriate amount of tax at the prescribed rates and deposit it with the government within the specified timelines. Deductees, on the other hand are required to provide accurate information to the deductor and ensure that TDS is correctly deducted from their income.

Types of TDS Returns

There are different types of TDS returns based on the nature of income and the status of the deductee:

  • Form 24Q: TDS on Salary
  • Form 26Q: TDS on Payments Other Than Salary
  • Form 27Q: TDS on Payments to Non-Residents
  • Form 27EQ: TCS (Tax Collected at Source)

Each form has specific requirements and deadlines for filing, depending on the nature and quantum of transactions.

Due Dates for Filing TDS Return

Quarter endingTDS Return Due Date (FY 2024-25)
30th June 202431st July 2024
30th September 202431st October 2024
31st December 202431st January 2025
31st March 202531st May 2025

Understanding TDS Return Forms

TDS return forms, such as Form 24Q, 26Q, 27Q and 27EQ have various components and sections that require detailed information about deductors, deductees and transaction details. Understanding the instructions for filling out each form accurately is essential to ensure compliance with tax laws.

TDS Rates and Thresholds

 TDS Rate Chart for FY 2024-25   
SectionNature of PaymentThreshold (Rs.)Individual / HUF TDS Rates (%)Others


TDS Rate (%)

192SalariesRs. 2,50,000Slab RatesSlab Rates
192APremature EPF withdrawal*Rs. 50,00010%10%
193– TDS on interest on securities***Rs. 10,00010%10%
194Payment of dividendRs. 5,00010%10%
194AInterest issued by banks or post offices on depositsRs. 40,000


Rs. 50,000 (For senior citizens)

194AInterest by others apart from on securitiesRs. 5,00010%10%
194BAmounts that someone has won through lotteries, puzzles, or gamesAggregate of Rs. 10,000**30%30%
194BBAmounts that someone has won from horse racesRs. 10,00030%30%
194CPayments to contractor or sub-contractor – Single PaymentsRs. 30,0001%2%
194CPayments to contractor/sub-contractor – Aggregate PaymentsRs. 1,00,0001%2%
194DPayment of insurance commission to domestic companiesRs. 15,000NA10%
194DPayment of insurance commission to companies other than domestic onesRs. 15,0005%NA
194DAMaturity of Life Insurance PolicyRs. 1,00,0005%5%
194EEPayment of an amount standing to the credit of an individual under NSS (National Savings Scheme)Rs. 250010%10%
194FPayment of repurchase of unit by UTI (Unit Trust of India) or any mutual fundNo Limit20%20%
194GPayments or commission on sale of lottery ticketsRs. 15,0005%5%
194HCommission or brokerageRs. 15,0005%5%
194IRent of land, building, or furnitureRs. 2,40,00010%10%
194IRent of plant and machineryRs. 2,40,0002%2%
194IAPayment for transfer of immovable property other than agricultural landRs. 50,00,0001%1%
194IBRent payment that is made by an individual or HUF not covered under payment 194IRs. 50,000 (per month)5%NA
194ICPayment that are made under Joint Development Agreement (JDA) to Individual/HUFNo Limit10%10%
194JFees paid for professional servicesRs. 30,00010%10%
194JAmount paid for technical servicesRs. 30,0002%2%
194JAmounts paid as royalty for sale/distribution/exhibition of cinematographic filmsRs. 30,0002%2%
194KPayment of income for units of a mutual fund, for example- dividendsRs. 5,00010%10%
194LAPayment made for compensation for acquiring certain immovable propertyRs. 2,50,00010%10%
194LBPayment of interest on infrastructure bonds to Non-Resident IndiansNA5%5%
194LBA(1)Certain income distributed by a business trust among its unit holderNA10%10%
194LDPayment of interest on rupee-denominated bonds, municipal debt security, and government securitiesNA5%5%
194MAmounts paid for contract, brokerage, commission or professional fee (other than 194C, 194H, 194J)Rs. 50,00,0005%5%
194NIn case cash withdrawal over a certain amount takes place from the bank, and ITR is filedRs. 1,00,00,0002%2%
194NIn case cash withdrawal takes place from a bank and one does not file ITRRs. 20,00,0002%2%
194OAmount paid for the sale of products/services by e-commerce service providers via their digital platformRs. 5,00,0001%1%
194QPayments made for the purchase of goodsRs. 50,00,0000.10%0.10%
194STDS on the payment of any crypto or other virtual assetNA1%1%
206AATDS for non-availability of PANNAAt a rate higher of


Specified rate as per the act


Rate in force

206ABTDS on non-filers of Income tax returnNARate higher of:



Twice the mentioned rate in provision

Rate in force


Importance of Correct TDS Returns

Filing correct TDS returns is paramount for both deductors and deductees. Correct TDS returns facilitate seamless tax operations, prevent unnecessary tax demands and ensure compliance with income tax laws. Moreover, incorrect TDS returns can attract penalties and scrutiny from tax authorities.

TDS Return Filing Process

The process of filing TDS returns involves

  • Registration on the TRACES portal
  • Preparation of TDS returns
  • Submission to the Tax authorities.

It’s essential to follow the prescribed procedures and guidelines to file TDS returns accurately and timely.

Correction Mechanism: TDS Returns Correction

Despite meticulous efforts, errors may occur in TDS returns. In such cases, the correction mechanism allows deductors to rectify the mistakes by filing correction statements on the TRACES portal. It’s crucial to address errors promptly to avoid penalties and compliance issues.

Consequences of Non-Compliance

Non-compliance with TDS laws can have severe consequences, including penalties for late filing, interest on late payment of TDS and legal ramifications. Deductors and deductees must adhere to TDS regulations to avoid such consequences.

Importance of TDS Certificates

TDS certificates, such as Form 16, 16A, 16B and 16C, serve as proof of tax deduction and are essential for deductees to claim tax credits. Deductors must issue TDS certificates accurately and timely to ensure compliance with tax laws.

Recent Developments and Amendments in TDS Laws

TDS laws undergo periodic amendments and updates to align with evolving economic and regulatory landscapes. Taxpayers need to stay updated with the latest developments and comply with the revised provisions to avoid compliance issues.

Best Practices for TDS Compliance

Adopting best practices for TDS compliance, such as maintaining proper records, conducting regular reviews and seeking professional assistance can streamline tax operations and mitigate compliance risks. Taxpayers need to implement these practices proactively to ensure smooth TDS compliance.


Understanding TDS returns is paramount for taxpayers to comply with Indian tax laws and avoid penalties and legal consequences. By adhering to the legal framework, filing TDS returns accurately and timely and adopting best practices for compliance, taxpayers can ensure smooth tax operations and contribute to the country's revenue collection efforts.
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