Question 1

What is TDS?

Accepted Answer

Tax Deducted at Source (TDS) is a statutory withholding mechanism under the Income-tax law whereby the person making specified payments (such as salaries, contractor fees, rent, or professional charges) deducts tax before disbursing the net balance to the payee and remits it to the Central Government.

Question 2

What is TDS Return Filing?

Accepted Answer

TDS Return Filing is the quarterly submission of a comprehensive statutory statement by the deductor to the Income Tax Department via TRACES, detailing the PANs of all payees, total payments made, tax deducted, and challan details against which the tax was deposited.

Question 3

Who is a deductor?

Accepted Answer

A deductor is an individual, corporate entity, firm, LLP, or institution legally obligated under income-tax provisions to deduct tax at source while making prescribed payments.

Question 4

Who is a deductee?

Accepted Answer

A deductee is the payee, contractor, employee, or professional from whose payment tax has been withheld at source, who is entitled to claim credit for that deducted tax against their annual income tax liability.

Question 5

Who needs to deduct TDS?

Accepted Answer

Entities making specified payments above statutory monetary thresholds—including companies, LLPs, partnership firms, government bodies, and individuals/HUFs whose business turnover exceeds statutory tax audit limits—are required to deduct TDS.

Question 6

Does every business need to deduct TDS?

Accepted Answer

TDS is transaction-specific. If your business makes payments (such as rent, contract fees, or salaries) exceeding the prescribed threshold to specified persons, TDS withholding applies regardless of your profit or loss.

Question 7

What is TAN?

Accepted Answer

TAN stands for Tax Deduction and Collection Account Number. It is a unique 10-digit alphanumeric code issued by the Income Tax Department that must be obtained by every person responsible for deducting or collecting tax at source.

Question 8

Who needs a TAN?

Accepted Answer

Every entity or person required to deduct TDS must obtain a TAN. Operating without or failing to quote a TAN on payment challans and quarterly statements attracts statutory penalties under the Act.

Question 9

What is the difference between TAN and PAN?

Accepted Answer

PAN (Permanent Account Number) is used for tracking an individual's or business's overall income tax liability. TAN is exclusively used for deducting, depositing, and reporting withholding tax.

Question 10

When does TDS apply?

Accepted Answer

TDS applies at the point of credit of the amount to the payee's account in your books or at the time of actual payment (by cash, cheque, or bank transfer), whichever occurs earlier, unless the specific section provides otherwise.

Question 11

How is TDS applicability determined?

Accepted Answer

By evaluating the nature of the expense, payee status (resident or non-resident), whether the aggregate payment exceeds the monetary threshold, and the tax act applicable to the transaction date.

Question 12

What is the Income-tax Act, 2025?

Accepted Answer

It is India's enacted direct tax legislation effective from 1 April 2026, which consolidates and restructures withholding provisions into a streamlined, tabular architecture replacing the legacy Income-tax Act, 1961.

Question 13

What changed in TDS from 1 April 2026?

Accepted Answer

Transactions on or after 1 April 2026 are governed by the Income-tax Act, 2025. Withholding sections have been consolidated primarily under Section 392 (Salaries) and Section 393 (Non-Salary tables), while quarterly forms have been re-indexed (Form 138, 140, 144, 141).

Question 14

Does the Income-tax Act, 1961 still apply?

Accepted Answer

Yes, for historical transactions. Payments made or credited up to and including 31 March 2026 remain strictly governed by the provisions, legacy sections, and forms of the Income-tax Act, 1961.

Question 15

Which Act applies to payments made before 1 April 2026?

Accepted Answer

The Income-tax Act, 1961 governs all deductions, deposits, and statements for periods prior to 1 April 2026.

Question 16

Which Act applies to payments made on or after 1 April 2026?

Accepted Answer

The Income-tax Act, 2025 governs all withholding obligations for transactions executed on or after 1 April 2026.

Question 17

What is Section 392 under the Income-tax Act, 2025?

Accepted Answer

Section 392 is the direct statutory provision governing the deduction of tax at source from salaries, corresponding to legacy Section 192 of the 1961 Act.

Question 18

What is Section 393 under the Income-tax Act, 2025?

Accepted Answer

Section 393 consolidates non-salary withholding payments (such as contracts, professional fees, rent, commission, and interest) into a structured statutory table with designated entry rows.

Question 19

What happened to old sections like 194C, 194J, and 194H?

Accepted Answer

These legacy section numbers are retained for historical transactions up to 31 March 2026. For transactions on or after 1 April 2026, they map to corresponding table entries under Section 393.

Question 20

Are TDS rates and monetary thresholds changed under the new Act?

Accepted Answer

The Income Tax Department has officially confirmed that withholding tax rates and monetary thresholds have broadly been retained in corresponding table entries under the new Act.

Question 21

Do existing business contracts need rewriting because of the new Act?

Accepted Answer

No. Official Income Tax Department guidance clarifies that contracts do not automatically require amendment merely because the new Act commenced.

Question 22

What is Form 138?

Accepted Answer

Form 138 is the quarterly statement of deduction of tax under Section 392 in respect of salaries, previously known as Form 24Q under the 1961 Act.

Question 23

What was Form 24Q?

Accepted Answer

Form 24Q was the legacy quarterly TDS statement for salary payments under the Income-tax Act, 1961, now restructured as Form 138.

Question 24

What is Form 140?

Accepted Answer

Form 140 is the quarterly statement of deduction of tax under Section 393 in respect of payments to resident payees other than salary, previously known as Form 26Q.

Question 25

What was Form 26Q?

Accepted Answer

Form 26Q was the legacy quarterly TDS statement for non-salary payments made to resident deductees under the 1961 Act, now restructured as Form 140.

Question 26

What is Form 144?

Accepted Answer

Form 144 is the quarterly statement for deduction of tax on payments other than salary made to non-residents, previously known as Form 27Q.

Question 27

What was Form 27Q?

Accepted Answer

Form 27Q was the legacy quarterly statement for non-resident withholding under the 1961 Act, now indexed as Form 144.

Question 28

What is Form 141?

Accepted Answer

Form 141 is the unified challan-cum-statement under the Income-tax Act, 2025 consolidating legacy forms 26QB (property), 26QC (rent), 26QD (contractor by individuals), and 26QE (crypto/VDAs) for specified transactions.

Question 29

Does Form 141 replace standard quarterly statements?

Accepted Answer

No. Form 141 applies exclusively to specified challan-cum-statement transactions under Section 393(1). Routine commercial and salary withholding continues via Forms 138, 140, and 144.

Question 30

What is Form 16?

Accepted Answer

Form 16 is the annual certificate of deduction of tax at source issued by an employer to an employee specifying total salary paid, tax computed, and tax deposited.

Question 31

What is Form 16A?

Accepted Answer

Form 16A is the quarterly TDS certificate issued to deductees for non-salary payments (such as professional fees, contract payments, rent, and interest), generated directly from TRACES.

Question 32

What is TRACES?

Accepted Answer

TRACES (TDS Reconciliation Analysis and Correction Enabling System) is the Income Tax Department's official cloud portal for managing TDS accounts, downloading Conso files, viewing Justification Reports, and generating Forms 16/16A.

Question 33

Does TRACES have separate access for the 2025 Act?

Accepted Answer

Yes. The TRACES portal provides dedicated access channels for compliances from FY 2026-27 onwards under the Income-tax Act, 2025, alongside legacy processing.

Question 34

What is a TDS challan?

Accepted Answer

A tax deposit receipt (generated online via the e-Filing portal) containing a unique Challan Identification Number (CIN) proving that withheld tax has been deposited into the Government account.

Question 35

When should monthly TDS be deposited?

Accepted Answer

Generally, tax deducted during any calendar month must be deposited by the 7th of the following month (e.g., tax deducted in May must be deposited by 7 June).

Question 36

What is the March TDS deposit deadline?

Accepted Answer

For non-government deductors, tax deducted during the month of March can be deposited up to 30 April without attracting interest penalties.

Question 37

What are the quarterly TDS statement due dates?

Accepted Answer

Quarter 1 (April–June) is due by 31 July; Quarter 2 (July–September) by 31 October; Quarter 3 (October–December) by 31 January; and Quarter 4 (January–March) by 31 May.

Question 38

Can quarterly TDS due dates be extended?

Accepted Answer

Yes. The Central Board of Direct Taxes (CBDT) may notify due date extensions during portal transitions or technical disruptions.

Question 39

What is short deduction of TDS?

Accepted Answer

Short deduction occurs when a deductor withholds tax at a rate lower than legally prescribed, misapplies thresholds, or fails to apply higher withholding on inoperative PANs.

Question 40

What is short payment of TDS?

Accepted Answer

Short payment occurs when the amount of tax deposited via challan into the government treasury is less than the total tax actually deducted from payees in that period.

Question 41

What is interest on late deduction?

Accepted Answer

Interest is levied at 1% per month (or part of a month) from the date tax was deductible to the date tax was actually deducted.

Question 42

What is interest on late deposit?

Accepted Answer

Interest is levied at 1.5% per month (or part of a month) from the date tax was deducted to the actual date of deposit into the government account.

Question 43

What is the late filing fee for quarterly TDS statements?

Accepted Answer

A statutory late fee of ₹200 per day under Section 234E is levied for every day the statement remains unfiled, subject to a maximum cap equal to the total TDS amount.

Question 44

What is a TDS default?

Accepted Answer

A systemic error flagged by TRACES indicating short deduction, short payment, late filing fee, or uncredited interest on your quarterly filing.

Question 45

What is a TRACES Justification Report?

Accepted Answer

A detailed XML/text file downloaded from TRACES identifying the exact invoice, PAN, challan, and line-item discrepancies causing defaults in a processed statement.

Question 46

What is a TDS correction statement?

Accepted Answer

A supplementary electronic return filed to rectify errors in an original statement, such as updating incorrect PANs, adjusting challan allocations, or adding omitted payees.

Question 47

Can an invalid or incorrect PAN be corrected after filing?

Accepted Answer

Yes. A C3 correction statement can be filed via TRACES using the consolidated (Conso) file to replace erroneous PANs with valid deductee details.

Question 48

Can challan details be corrected after filing?

Accepted Answer

Yes. Challan allocation, BSR codes, challan numbers, and deposit dates can be modified through online or offline correction workflows on TRACES.

Question 49

What happens if a payee does not furnish a valid PAN?

Accepted Answer

The deductor is legally required to withhold tax at higher statutory rates (typically 20% or prevailing rates) as prescribed under the applicable withholding provisions.

Question 50

What is contractor TDS under the current framework?

Accepted Answer

Payments made to resident contractors for carrying out any work (including transport, advertising, or catering) subject to Section 393 table criteria.

Question 51

What is professional fee TDS under the current framework?

Accepted Answer

Withholding on fees paid for legal, medical, engineering, architectural, accountancy, or technical consultancy services under Section 393.

Question 52

What is rent TDS under the current framework?

Accepted Answer

Deduction of tax at source from payments for the use of land, building, machinery, or equipment exceeding statutory annual thresholds.

Question 53

What is commission or brokerage TDS under the current framework?

Accepted Answer

Withholding on payments made to agents, brokers, or intermediaries acting on behalf of another person, governed under Section 393 table entries.

Question 54

What is interest TDS under the current framework?

Accepted Answer

Withholding on interest payments other than interest on securities made to resident entities exceeding prescribed annual thresholds.

Question 55

What is non-resident TDS?

Accepted Answer

Withholding on any sum payable to a non-resident individual or foreign company that is chargeable to tax in India, filed quarterly in Form 144.

Question 56

How does Double Taxation Avoidance Agreement (DTAA) affect TDS?

Accepted Answer

A deductor may apply lower treaty withholding rates if the non-resident deductee furnishes a valid Tax Residency Certificate (TRC), Form 10F, and No-PE declaration.

Question 57

What are Form 145 and Form 146?

Accepted Answer

Under the Income-tax Act, 2025, Form 145 (earlier Form 15CA) and Form 146 (earlier Form 15CB CA certificate) are statutory foreign remittance reporting declarations.

Question 58

What is a Lower or Nil TDS Certificate?

Accepted Answer

A certificate issued by an Assessing Officer upon application by the payee permitting the deductor to withhold tax at a lower or nil rate.

Question 59

Which section governs lower TDS certificates under the new Act?

Accepted Answer

Section 395(1) of the Income-tax Act, 2025 corresponds to legacy Section 197 for issuing certificates for lower or nil withholding.

Question 60

Can TeleTax Solutions guarantee a lower TDS certificate?

Accepted Answer

No. The issuance of lower withholding certificates is the exclusive discretionary power of the jurisdictional Assessing Officer based on the payee's tax history.

Question 61

Why is TDS reconciliation between books and returns necessary?

Accepted Answer

To ensure that all expense ledger entries subject to TDS match actual deductions, deposited challans, and amounts reported in quarterly statements.

Question 62

What happens if an expense is booked but TDS is not deducted?

Accepted Answer

The business faces 30% disallowance of that expenditure in its corporate Income Tax Return, alongside mandatory interest penalties under the Act.

Question 63

How does TDS affect an employee's Income Tax Return?

Accepted Answer

TDS reported in Form 138 populates the employee's Form 26AS and AIS, allowing them to claim tax credits when filing their annual ITR.

Question 64

How does TDS connect to monthly payroll compliance?

Accepted Answer

Monthly payroll computations calculate average tax liabilities across employee salary slabs, deducting TDS monthly and consolidating figures into quarterly Form 138.

TDS RETURN FILING

PAYMENT DATE DETERMINES THE GOVERNING INCOME TAX ACT

Income-tax Act, 1961

Income-tax Act, 2025

WHAT IS TAX DEDUCTED AT SOURCE?

DEDUCTOR VS DEDUCTEE

CURRENT 2026 TDS STATEMENTS & FORMS

Salary TDS Statement

Resident Non-Salary TDS

Non-Resident Withholding

Challan-Cum-Statement

TDS COMPLIANCE CONTROL DASHBOARD

Form 138 (Salary), Form 140 (Resident), and Form 144 (Non-Resident)

YOUR DEDICATED TDS COMPLIANCE TEAM

TeleTax TDS Service Scope

TDS RETURN FILING SUPPORT ACROSS INDIA

FREQUENTLY ASKED QUESTIONS

IS YOUR TDS COMPLIANCE UP TO DATE?