Tds on below threshold limit
This query is : Resolved
20 February 2016
dear all, tell me that is tds deduction is nil because bills amount is below thresholds limit than is there any need to fill this entry in tds return 26q if yes than why ? and tell me penalty on that ??
20 February 2016
No need to deduct tds and show in tds return if threshold limit of tds is not crossing.
20 February 2016
sir is it mandatory to show payment in return if tds is nill tell me in detail
27 July 2025
Great question! Here’s a detailed explanation about TDS on payments below the threshold limit and the reporting requirements:
---
### 1. **Is TDS deduction mandatory if payment is below threshold?**
No.
If the payment amount is **below the threshold limit** prescribed under the relevant section of the Income Tax Act (like ₹30,000 for professional fees u/s 194J, ₹1,80,000 for rent u/s 194I, etc.), **there is no obligation to deduct TDS**.
---
### 2. **Do you need to report such payments in the TDS return (Form 26Q)?**
* **If no TDS is deducted**, generally **you do NOT need to report such payments in Form 26Q**.
* Form 26Q is mainly for reporting **payments on which TDS has been deducted** (including details of deductee, amount paid, TDS deducted, TDS deposited).
* Payments without TDS deduction due to threshold limits are **not required to be reported** in the TDS return.
---
### 3. **Why is it not required to show nil entries?**
* The Income Tax Department requires details only for **transactions where TDS is deducted and deposited**.
* The purpose of Form 26Q is to track TDS compliance and credit to deductees.
* Showing payments without TDS would unnecessarily increase reporting and clutter.
---
### 4. **What about penalties if you do not deduct TDS because amount is below threshold?**
* There is **no penalty** for **not deducting TDS when the payment is below threshold limit**.
* Penalty arises only if you fail to deduct TDS when you are legally required to do so.
---
### Summary:
| Situation | TDS Deduction Required? | Reporting in Form 26Q Required? | Penalty? |
| ---------------------------------------- | ----------------------- | ------------------------------- | ------------------------ |
| Payment amount **below threshold limit** | No | No | No |
| Payment amount **above threshold limit** | Yes | Yes | Yes, if TDS not deducted |
---
If your accounting software or process insists on recording every payment for internal tracking, you can do that internally, but **from TDS return filing point of view, only payments with deducted TDS need to be reported.**
---
If you want, I can also help you draft a compliance checklist for your team to handle threshold limits and TDS returns. Would that help?
---
### 1. **Is TDS deduction mandatory if payment is below threshold?**
No.
If the payment amount is **below the threshold limit** prescribed under the relevant section of the Income Tax Act (like ₹30,000 for professional fees u/s 194J, ₹1,80,000 for rent u/s 194I, etc.), **there is no obligation to deduct TDS**.
---
### 2. **Do you need to report such payments in the TDS return (Form 26Q)?**
* **If no TDS is deducted**, generally **you do NOT need to report such payments in Form 26Q**.
* Form 26Q is mainly for reporting **payments on which TDS has been deducted** (including details of deductee, amount paid, TDS deducted, TDS deposited).
* Payments without TDS deduction due to threshold limits are **not required to be reported** in the TDS return.
---
### 3. **Why is it not required to show nil entries?**
* The Income Tax Department requires details only for **transactions where TDS is deducted and deposited**.
* The purpose of Form 26Q is to track TDS compliance and credit to deductees.
* Showing payments without TDS would unnecessarily increase reporting and clutter.
---
### 4. **What about penalties if you do not deduct TDS because amount is below threshold?**
* There is **no penalty** for **not deducting TDS when the payment is below threshold limit**.
* Penalty arises only if you fail to deduct TDS when you are legally required to do so.
---
### Summary:
| Situation | TDS Deduction Required? | Reporting in Form 26Q Required? | Penalty? |
| ---------------------------------------- | ----------------------- | ------------------------------- | ------------------------ |
| Payment amount **below threshold limit** | No | No | No |
| Payment amount **above threshold limit** | Yes | Yes | Yes, if TDS not deducted |
---
If your accounting software or process insists on recording every payment for internal tracking, you can do that internally, but **from TDS return filing point of view, only payments with deducted TDS need to be reported.**
---
If you want, I can also help you draft a compliance checklist for your team to handle threshold limits and TDS returns. Would that help?
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