Choose the form for the payment and the governing year
For periods governed by the Income-tax Act, 1961 and Income-tax Rules, 1962, use Form 24Q for salary and Form 26Q for applicable resident non-salary payments. Use Form 27Q for applicable non-resident non-salary payments. For tax year 2026–27 beginning on 1 April 2026, the Income-tax Act, 2025 and the Income-tax Rules, 2026 apply: Form 138 replaces Form 24Q and Form 140 replaces Form 26Q. Use the correct year’s portal and utilities for original or correction statements.
| Quarter ending | Ordinary quarterly statement due date | Legacy Form 16A due date |
|---|---|---|
| 30 June | 31 July | 15 August |
| 30 September | 31 October | 15 November |
| 31 December | 31 January | 15 February |
| 31 March | 31 May | 15 June |
Check any notified extension for the period. Under the legacy rules, salary Form 16 is an annual certificate normally due by 15 June following the financial year. Form 16A for non-salary deductions is normally due within 15 days from the quarterly statement’s due date, not from the date it was filed. For periods governed by the 2025 Act, check Rule 215: Form 130 is the ordinary salary certificate and Form 131 is the ordinary non-salary certificate, with specific forms for other deductions.
Under the ordinary legacy Rule 30 timetable for non-government deductors, deposit March deductions by 30 April and other deductions within seven days from the end of the month of deduction. Special cases and prescribed challan-cum-statement transactions have different rules. Use the applicable payment form and distinguish the tax major head from the payment minor head; ordinary TDS deposits and payments against a demand may use different codes.
Identify what produced the demand
| Issue | How to check it |
|---|---|
| Late deduction or payment | Under legacy section 201(1A), calculate 1% per month or part from the date deductible to actual deduction and 1.5% per month or part from deduction to actual payment in the applicable default case. Rebuild from dated records. These are not daily rates. |
| Late statement | Legacy section 234E generally charges ₹200 per day of continuing default, capped at tax deductible or collectible. The cap is in subsection (2). Check due date, actual submission and any applicable relief or incorrect demand before paying. |
| Penalty | Legacy section 271H provides for a ₹10,000 to ₹1 lakh penalty for late filing or incorrect information. The late-filing relief has conditions and is distinct from the fee. The historical one-year window was shortened to one month from 1 April 2025. |
| PAN or rate | Check the correct PAN and applicable rate, exceptions and CBDT relief for the transaction date. Section 206AA is not a flat 20% rule for every payment. Section 206AB for specified non-filers was omitted from 1 April 2025. |
| Challan mismatch | Reconcile CIN, BSR, tender date, serial and amount against the actual bank and statement records. A missing or overbooked allocation does not prove late payment; a real deposit shortfall needs separate action. |
| Lower deduction certificate | Check deductor, deductee, section, period, authorised rate, remaining limit and identifier before correcting the statement. A number alone does not make a payment eligible. |
Use the correction process for the applicable period
Review the processing intimation and justification report in TRACES where applicable. Distinguish a clerical statement error from actual short deduction or deposit. Use the supported online correction route for eligible fields; for other supported cases request the consolidated file and validate the corrected file with the current applicable utility. Respect the statutory correction window. Keep the acknowledgement and check the reprocessed statement, updated demand and certificates. Avoid assuming a portal correction guarantees a particular outcome or processing time.
In legacy Form 24Q, Annexure I records the quarterly deductee details and Annexure II records annual salary and computation details for Q4. Apply the appropriate salary regime and exemptions for the year. The new regime was the default from AY 2024–25 under legacy section 115BAC; employer payroll intimation is not itself an employee’s final election in the return. Use the prescribed annexures for the form actually filed.
Business benefits and perquisites
Legacy section 194R generally requires 10% TDS where a provider gives a resident a benefit or perquisite arising from business or a profession and the value or aggregate exceeds ₹20,000 in the financial year. Check the applicable exceptions and current section for the period. Distinguish dealer incentive trips from genuine business conferences and ordinary discounts, and apply the CBDT guidelines. Where a benefit is wholly in kind or cash is insufficient, ensure the applicable tax is paid before release. The tax borne by the provider is itself an additional benefit under the CBDT guidance.
Worked examples
1. Incorrect PANs in FY 2023–24 Q2
Assume ₹3 crore of section 194C contractor payments, all validly subject to 2% when accurately reported, giving ₹6 lakh. In the two affected rows, ₹15 lakh and ₹10 lakh attract ₹30,000 and ₹20,000 at 2%. A comparison at 20% gives ₹3 lakh and ₹2 lakh, differences of ₹2.70 lakh and ₹1.80 lakh, or ₹4.50 lakh total. Verify that both contractors are actually subject to the 2% rate and that no transporter exception applies. If only the entered PANs were wrong, correct them with evidence and confirm reprocessing. No ₹36,000 interest can be inferred without relevant dates and the legal basis.
2. Section 234E fee cap
From the 31 July 2023 deadline to filing on 18 November 2023, the statement is 110 days late. At ₹200 a day the fee would be ₹22,000. With ₹18,000 of tax deductible, subsection (2) caps it at ₹18,000 on the assumed facts. Apply the correct payment route and separately consider any penalty.
3. Challan overbooking
A ₹2.50 lakh challan cannot cover ₹2.75 lakh of entries; ₹25,000 is unallocated. A separate ₹50,000 challan can cover that difference only if it is valid and available for the relevant allocation. The remaining balance would be ₹25,000. Another example: ₹65,000 allocated to a ₹50,000 balance leaves ₹15,000 uncovered. Verify the dates before assessing interest; correcting allocation does not change when tax was actually deposited.
4. Lower-rate certificate
On ₹50 lakh of professional fees, an applicable 1% certificate yields ₹50,000, compared with ₹5 lakh at 10%, a difference of ₹4.50 lakh. If the valid certificate covered the whole amount and only the identifier was omitted, update it and verify the result. If its scope or limit is insufficient, calculate the shortfall on the affected payment.
5. Overseas incentive trip for resident distributors
Twenty-five distributors receive benefits of ₹60,000 each, or ₹15 lakh total. Assuming section 194R applies and no exception does, 10% is ₹6,000 per distributor or ₹1.50 lakh if the recipients fund the tax. If the provider instead bears it, the gross-up is ₹15 lakh × 10% ÷ 90%, approximately ₹1,66,667 in total before payee-level rounding, or about ₹6,666.67 each. Complete the tax payment step before release and report against the applicable statement and period.
Quarterly controls
- Reconcile ledger credit and payment dates, TDS bases and codes, PANs, certificates and challan utilisation.
- Check the statement and certificate dates for the actual quarter and year, and any applicable extensions.
- Keep validated file acknowledgements, payment evidence and the completed correction trail. Separate income-tax expenditure consequences, interest, fees, penalty and prosecution exposure.
Frequently asked questions
1. Can an officer routinely waive section 234E?
The fee is statutory and the reasonable-cause penalty rule does not itself waive it. Check calculation, applicability and any specific notified or judicial relief.
2. Does selecting a section code establish the legal TDS rate?
No. Recheck the contract and applicable rate; the processing system is not a legal classification ruling. A short deduction, expenditure disallowance and interest have separate conditions.
3. What if a PAN is inoperative?
Check whether the Aadhaar-linking requirement applies, the transaction date, the date PAN became operative and applicable CBDT relief. Apply the actual higher-rate rule, including any transaction-specific exceptions.
4. What if a certificate download is in progress?
Check the request status and prerequisite statement processing in TRACES. Download the certificate when available and furnish it by the applicable due date. Processing times are not guaranteed.
5. Can the legacy Form 26Q cover the full year at once?
No. Each quarter has a separate statement and any applicable late fee is assessed for that statement.
6. Can non-payment of TDS lead to prosecution?
Yes, where the statutory conditions are met. Check the applicable version, amount and relevant payment dates. A proviso in the legacy law addresses covered payment made by the statement due date. The Finance Act, 2026 changed the prosecution provision with effect from 1 March 2026; do not assume one historical sentencing range or that directors are automatically liable.
Sources
- Finance (No. 2) Act, 2024: penalty relief and legacy provisions
- Finance Act, 2025: omission of section 206AB
- Finance Act, 2026: amendments to prosecution provisions
- Income-tax Rules, 2026: rules 215 and 219 and associated forms
- Income Tax Department: Form 138 manual
- Income Tax Department: Form 140 guidance
- Income Tax Department: TDS transition and correction guidance
- Income Tax Department: TDS challan corrections through TRACES or the Assessing Officer
- CBDT Circular 12/2022: section 194R benefits and tax borne by the provider