TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) are advance tax collection mechanisms — tax is deducted or collected at the point of payment, before the income reaches the recipient. For businesses, TDS compliance is one of the most critical monthly obligations covering salaries, contractor payments, rent, professional fees, and more. Non-compliance attracts interest, penalties, and disallowance of expenses. This guide covers TDS and TCS comprehensively for businesses and individuals.
💡 Need TDS compliance management? Our CA team handles monthly TDS computation, challan payment, quarterly 24Q/26Q filing, and Form 16/16A issuance for businesses across India. Send an Enquiry →
1. Key TDS Sections Every Business Must Know
| Section | Payment Type | Threshold | TDS Rate |
|---|---|---|---|
| 192 | Salary | Above basic exemption | As per slab rates |
| 194C | Contractor / sub-contractor | ₹30,000 per payment / ₹1L p.a. | 1% (individual), 2% (others) |
| 194J | Professional / technical fees | ₹30,000 per year | 10% professional, 2% technical |
| 194I | Rent | ₹2.4 lakh per year | 10% (land/building), 2% (machinery) |
| 194IB | Rent — individuals/HUF (non-audit) | ₹50,000 per month | 5% |
| 194A | Interest (other than banks) | ₹5,000 per year | 10% |
| 194Q | Purchase of goods | ₹50 lakh per year from one seller | 0.1% |
| 194H | Commission / brokerage | ₹15,000 per year | 5% |
| 195 | Payment to non-residents | Any amount | As per DTAA / applicable rate |
Paying contractors, landlords, or professionals without deducting TDS? You become the assessee in default — liable for the TDS amount plus 1.5% interest per month. Check your TDS exposure now.
Check My TDS Applicability →2. TDS Compliance Calendar
| Activity | Due Date |
|---|---|
| TDS deposit (April to February) | 7th of the following month |
| TDS deposit — March (non-salary) | 30th April |
| Quarterly TDS return — Q1 (Apr–Jun) | 31st July |
| Quarterly TDS return — Q2 (Jul–Sep) | 31st October |
| Quarterly TDS return — Q3 (Oct–Dec) | 31st January |
| Quarterly TDS return — Q4 (Jan–Mar) | 31st May |
| Form 16 issuance (salary) | 15th June |
| Form 16A issuance (non-salary) | 15 days from TDS return due date |
TDS quarterly returns (24Q/26Q) require PAN of all deductees — missing or wrong PANs attract 20% higher TDS and ₹200/day late fee for returns. Our team handles accurate bulk PAN verification.
TDS Return Filing Help →3. TCS — Tax Collected at Source
TCS is collected by the seller from the buyer at the time of receipt. Key TCS provisions:
- Section 206C(1H) — Sale of goods: Sellers with turnover > ₹10 crore collect 0.1% TCS on receipts exceeding ₹50 lakh from a single buyer
- Section 206C(1G) — Foreign remittance (LRS): 20% TCS on overseas tour packages; 5% on education/medical loans above ₹7 lakh
- 206CCA: Twice the normal TCS rate for buyers who haven't filed ITR for the past 2 years
4. Consequences of TDS Non-Compliance
- Interest for late deduction: 1% per month from when TDS should have been deducted
- Interest for late payment: 1.5% per month from date of deduction to deposit
- Late fee for TDS return: ₹200 per day under Section 234E — capped at TDS amount
- Expense disallowance (Section 40(a)(ia)): 30% of TDS-applicable expenses where TDS not deducted is disallowed — a hidden tax cost
- Prosecution: Wilful failure to deduct or deposit TDS can attract imprisonment of 3 months to 7 years
TDS / TCS Compliance — Monthly Deduction, Filing & Form 16 — Pan India
Our CA team manages end-to-end TDS compliance — monthly computation across all sections, challan payments, quarterly 24Q/26Q returns, Form 16 and 16A issuance, and lower TDS certificate applications. Serving businesses in Banda, NCR, UP, and across India.
Start TDS Compliance →Disclaimer: This article is for general informational and educational purposes only. It does not constitute legal or tax advice. Laws are subject to change. Please consult our team for situation-specific guidance.