Request for Opinion on TDS Applicability and Deduction

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Rajesh Kumar Pandey

Manager-Accounts

54 Points Posted on 08 October 2025

Dear Friends,

Please share your opinion on the following case:

We have been booking service bills from April 2025 to February 2026, each bill being below ₹15,000. Hence, the TDS threshold limit was not crossed during this period, and accordingly, no TDS was deducted.

However, in March 2026, the total cumulative bill amount for the financial year exceeds ₹1,00,000. In this situation, I would like to clarify:

Should TDS be deducted only on the bill received in March 2026 (i.e., the amount exceeding the limit)?
Or should TDS be deducted on the total amount booked during the entire financial year (April 2025 to March 2026)?
If TDS is to be deducted on the total amount for the year, would any interest or penalty apply on the earlier bills (April to February), since TDS was not deducted at that time?

Your valuable inputs on this matter will be highly appreciated.

Replies (6)

Quick Summary

This discussion seeks clarification on Tax Deducted at Source (TDS) applicability for service bills. The user booked several bills below the ₹15,000 threshold between April 2025 and February 2026, resulting in no TDS deduction. However, the cumulative amount exceeded ₹1,00,000 in March 2026. The core question is whether TDS should be deducted only on the March bill or the entire financial year's amount, and if interest or penalties apply to earlier non-deducted bills.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121546 Points Posted on 09 October 2025

2. Total amount.

3. No interest or penalty to be charged

sabyasachi mukherjee

Profession

19978 Points Posted on 09 October 2025

Nature of work to be mentioned.

Otherwise tds cannot be ascertained.

Rajesh Kumar Pandey

Manager-Accounts

54 Points Posted on 03 November 2025

TDS Nature is for Professional Services

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121546 Points Posted on 03 November 2025

If TDS is deducted u/s. 194C, interest will not be applicabe. It will be applicable if TDS deducted u/s. 194J IT act.

Aashok Kumar Sharma

Finance/Compliance Consultant

77979 Points Posted on 06 November 2026

TDS must be accounted for in March. Ensure timely deposit by the statutory due date (April 30th for March deductions) to avoid higher late-deposit interest charges (1.5% per month).

Rushabh

Automation Expert

10733 Points Posted on 14 November 2026

Assuming the payments are for a resident contractor’s work under section 194C, the threshold for FY 2025–26 is ₹30,000 for a single payment or ₹1,00,000 in aggregate. Once the aggregate exceeds ₹1,00,000, TDS is required on the entire amount paid or credited to the contractor during the year, not merely the excess or the March bill. Deduct it from the March payment/credit; do not reopen earlier bills solely to deduct TDS retrospectively.

Because the annual threshold was crossed only in March, failure to deduct on the earlier bills when they were below the threshold would not ordinarily attract interest for those earlier dates. If TDS is then deducted in March but deposited late, interest under section 201(1A) generally applies at 1% per month or part of a month from deduction to deposit. The applicable section, rate and threshold depend on the nature of the service and payee; section 194J, for example, has different rules.

This determination should be reflected in the vendor ledger and year-end TDS reconciliation so the deduction and deposit are correctly reported. Manual threshold tracking across bills and vendors is difficult; automation can reduce repetitive work while leaving classification and review under professional judgment. At Jir AI, our 2,000+ AI agents and 650+ integrations streamline GST, ITR, TDS, TCS and other compliance workflows, helping reduce manual workload by up to 70%. For a walkthrough of automating compliance workflows, connect with us on WhatsApp: https://wa.me/message/3HVOZ7HIY4ESC1