What is TDS? Rules, Rates and Due Dates For FY 2026-27

Updated on : 03 August 20267 min read

Quick Summary
Tax Deducted at Source (TDS) under the Income Tax Act 2025 requires payers to deduct tax before paying recipients. It covers salaries, rent, professional fees, interest and more. The article explains deduction timing, monthly deposit and quarterly return due dates, certificates, Form 26AS credits, penalties and FAQs.

What is TDS? 

TDS stands for Tax Deducted at Source is an income tax collection method that captures tax directly at the origin of income. It is system where the payer (deductor) deducts a specific tax percentage before making a payment to the receiver (deductee) and deposit it into the account of the Central Government. The deductee can then claim full credit for this deducted tax against their annual tax liability using Form 26AS or TDS certificate.

Who is Liable to Deduct it?

  • Any person, including an individual, HUF (Hindu Undivided Family), firm and NRIs (non-resident Indians) are liable to deduct TDS if payment falls under specified provisions of the Income Tax Act.
  • Individuals and HUFs are generally exempt from deducting TDS but they face this obligation only if their previous financial year's business turnover crosses ₹1 crore or professional gross receipts cross ₹50 lakhs.  

Payments Covered Under TDS - With Sections and Rates

Section (IT Act 1961) Nature of Payment Rate
192 Salary Slab Rates
192A Premature EPF Withdrawal 10%
193 Interest on Securities 10%
194 Dividend 10%
194A Interest Other Than Securities 10%
194B Lottery and Game Winnings 30%
194C Contractor Payments 1% or 2%
194D Insurance Commission 2% or 10%
194G Lottery Commission 2%
194H Commission or Brokerage 2%
194I Rent 2% or 10%
194J Professional or Technical Fees 2% or 10%
194N Cash Withdrawal 2% or 5%
194P Specified Senior Citizens Slab Rates
194T Payments to Partners 10%

TDS Deduction Time 

TDS is generally deducted at the earlier of:

  • Book Entry: The moment the amount is credited to the payee's account within your financial books. 
  • Actual Payment: The moment physical or digital payment occurs via cash, cheque, bank transfer, or other modes. 

TDS Payment Due Date 

Once you withhold Tax Deducted at Source (TDS), it cannot remain in your business accounts. The law requires you to deposit these funds with the Central Government every month.  

Month of Deduction TDS Payment Due Date
April through February 7th of the immediate next month (e.g., May 7th for April deductions)
March 30th April

Note: The only exception is the month of March, where businesses get extended time to deposit the tax so they can finalize their financial year-end books. Government deductors using book entry must deposit TDS on the same day of deduction (or by 7 April for March deductions).

Click Here to know How to Pay TDS Online?

TDS Return Due Date

The TDS return filing dates occur on a quarterly rhythm: 

Forms (Act 1961) Forms (Act 2025) TDS Return Due Date
Form  24Q Form 138 - TDS on salary payments Apr to Jun - 31st July
Jul to Sep - 31st October
Oct to Dec - 31st January
Jan to Mar - 31st May
Form 26Q Form 140 - TDS on payments other than salary Apr to Jun - 31st July
Jul to Sep - 31st October
Oct to Dec - 31st January
Jan to Mar - 31st May
Form  27Q  Form 144 - TDS on payments made to Non-Residents Apr to Jun - 31st July
Jul to Sep - 31st October
Oct to Dec - 31st January
Jan to Mar - 31st May
Form 26QB, Form 26QC, Form 26QD & Form 26QE Form 141 - TDS on sale of property, rent, TDS deducted under section 194M and for crypto transactions Within 30 days of next month-end

TDS Certificate 

A TDS Certificate is a formal document given by the deductor to the deductee. It provides legal evidence that the tax was deducted and sent to the government. Recipients use these certificates to double-check their income records while preparing personal tax returns. 

TDS Certificate Types

IT Act 1961 IT Act 2025 Certificates For Due Date
Form 16 Form 130 Distributed annually by employers to employees. The deadline for issuance is June 15th, following the end of the financial year. 
Form 16A Form 131 Distributed quarterly by businesses for all non-salary deductions (including contract work, interest, or professional fees).

Within 15 days from the quarterly TDS return filing due date.

Q1 - 15th Aug,

Q2 - 15th Nov,

Q3 - 15th Feb,

Q4 - 15th Jun.
Form 16B Form 132 Issued by a property buyer to the seller Withing 15 days from the due date of furnishing the corresponding challan-cum statement
Form 16C Form 132 Issued by a tenant to their landlord Withing 15 days from the due date of furnishing the corresponding challan-cum statement
Form 16D Form 132 Issued by an individual or HUF to resident contractors, professionals or brokers u/s 194M Withing 15 days from the due date of furnishing the corresponding challan-cum statement
Form 16E Form 132 For the transfer of Virtual Digital Assets Withing 15 days from the due date of furnishing the corresponding challan-cum statement

TDS Credits in Form 26AS 

Form 26AS is a unified, master tax ledger provided by the Income Tax Department to all PAN holders. 

Automated Tax Tracking 

  • Whenever an entity deducts TDS against your PAN and submits their quarterly return, the transaction is automatically recorded in your Form 26AS and your Annual Information Statement (AIS). 
  • When filing your final Income Tax Return (ITR), the tax portal references Form 26AS to verify the tax already paid during the year. This ensures you are not taxed twice on your gross income. 

Penalty for Late Filing of TDS Returns 

Postponing your tax obligations creates expensive financial overhead. The government enforces strict daily penalties and interest charges for compliance delays.

  • Late Filing Penalty [Section 427]: Missing a quarterly TDS return deadline triggers an automatic fine of ₹200 per day until the return is submitted. 
  • Interest on Delayed Payments [Section 398(3)]: Failing to remit monthly TDS to the government on time triggers monthly interest charges: 
  1. 1.0% Per Month: Applied for failure to deduct the tax on time. It accumulates from the date deduction was due until the actual date of deduction. 
  2. 1.5% Per Month: Applied when tax is deducted but deposited late to the government. It accumulates from the precise date of deduction until the actual date of payment.  

(Note: Any fraction of a month is counted as a full month for interest calculations.) 

Know More : TDS Interest and Penalties with Latest Sections

Frequently Asked Questions (FAQs) 

If a recipient does not offer a valid Permanent Account Number (PAN), the paying 
party is legally bound to withhold tax at an elevated penalty rate. This rate is 
generally 20% or the specific rate assigned to that section, whichever happens to 
be higher.

You can easily monitor this by signing into the official Income Tax e-filing platform to inspect your Form 26AS or Annual Information Statement (AIS). Once your client submits their quarterly returns, the transaction details, the payer's identity, and the precise financial figures will automatically show up.

No. Central directives specify that if a supplier's invoice clearly separates the core cost of goods or services from the Goods and Services Tax (GST), you must only calculate TDS on the basic service or asset value. Do not compute TDS on any listed CGST, SGST, or IGST components.

Even though both act as collection tools at the source, they function in opposite directions:  
  • TDS (Tax Deducted at Source): Tax that you subtract and hold back from an expense payment being sent to a supplier. 
  • TCS (Tax Collected at Source): An extra tax percentage that you add to the bill and collect from a customer during a sales transaction, such as purchasing high-end vehicles or sending money abroad.

Yes, you can if your total tax liability is lower than the TDS deducted, you can claim the excess amount while filing your Income Tax Return.

Yes. Eligible taxpayers may apply for a lower or nil deduction certificate if permitted under the Income-tax Act.

You can check your TDS through Form 26AS or AIS available on the Income Tax e-filing portal.

Form 26AS can be accessed through the Income Tax e-filing portal after logging into your account.

Yes. You can claim TDS credit if it is correctly reflected in your tax records, such as Form 26AS or the Annual Information Statement (AIS).

Yes, eligible senior citizens can submit declaration, such as Form 121 to avoid TDS on FD interest if they satisfy the conditions under the Income-tax Act.

In most cases, a Tax Deduction and Collection Account Number (TAN) is required for deducting and depositing TDS, subject to applicable exceptions.
Chaitra Seetharam

About the Author

Finance Professional

I write on Income Tax, TDS, ITR filing, banking rules, investment schemes, and financial law updates in India. My articles simplify complex tax provisions, compliance requirements, and policy changes to help taxpayers, professionals, senior citizens, and businesses stay informed and financially aware.

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