TDS Basics: Deduction, Deposit, Quarterly Returns and Form 16
A beginner's guide to Tax Deducted at Source (TDS): who deducts it, when it must be deposited, the quarterly TDS returns (24Q, 26Q, 27Q), TDS certificates and the cost of delays.
By Ledgermint Editorial Team · · 2 min read
Key takeaways
- TDS is tax collected in advance: the payer deducts it from certain payments and deposits it with the government.
- TDS deducted in a month is generally deposited by the 7th of the next month (30 April for March).
- Deductors file quarterly returns — Form 24Q for salary, 26Q for other payments to residents and 27Q for non-residents.
- Certificates (Form 16 for salary, Form 16A for other payments) let the payee claim credit for the tax.
- Late deposit attracts interest and late filing attracts a fee, so a monthly TDS calendar is essential.
Tax Deducted at Source (TDS) is one of the first compliance tasks given to a new accounts executive. The idea is simple: instead of waiting for the payee to pay tax at the end of the year, the payer deducts a percentage at the time of payment and deposits it with the government.
Common payments that attract TDS
- Salary paid to employees
- Payments to contractors and sub-contractors
- Professional and technical fees
- Rent for land, buildings, plant and machinery
- Commission and brokerage
- Interest other than on securities
Each type of payment has its own rate and threshold. A business needs a TAN (Tax Deduction and Collection Account Number) before it can deduct and deposit TDS.
The TDS cycle in four steps
1. Deduct
Deduct TDS at the applicable rate at the time of credit or payment, whichever is earlier. If the payee has not furnished a PAN, a higher rate generally applies.
2. Deposit
Deposit the tax by the 7th of the following month. For tax deducted in March, the due date is 30 April.
3. File quarterly returns
| Form | Used for |
|---|---|
| 24Q | TDS on salary |
| 26Q | TDS on other payments to residents |
| 27Q | TDS on payments to non-residents |
| 27EQ | Tax collected at source (TCS) |
Returns are due by 31 July (April–June), 31 October (July–September), 31 January (October–December) and 31 May (January–March).
4. Issue certificates
Form 16 is issued to employees annually for TDS on salary; Form 16A is issued quarterly for other payments. Payees match these with their Form 26AS / Annual Information Statement when filing their income tax returns.
What happens if you are late?
- Interest is charged per month (or part of a month) for late deduction or late deposit.
- A late filing fee applies for each day a TDS return is delayed, capped at the amount of TDS.
- Penalties may apply for not filing or for filing incorrect returns.
A note on the Income-tax Act, 2025
From tax year 2026-27, TDS provisions sit in the new Income-tax Act, 2025, and section and form references are being renumbered. The cycle — deduct, deposit, file, certify — stays the same. Learn the concepts, then map them to the current section and form numbers your employer uses.
Rates, thresholds and due dates are set by law and can change. Always confirm them against current CBDT notifications.
Frequently asked questions
What is the due date for depositing TDS?
What is the difference between Form 24Q and Form 26Q?
What is the difference between Form 16 and Form 16A?
Learn this hands-on
- TDS Computation — Intermediate, 30 hours, ₹3,000
- TDS Return Filing — Intermediate, 30 hours, ₹3,500
- Payroll or Salary Statement — Beginner, 30 hours, ₹2,000
This article is for general education and is not tax, legal or investment advice. Laws and rates change — confirm current rules with official sources or a qualified professional.