TDS Filing in India: A Complete Guide for FY 2024-25

Tax Deducted at Source (TDS) is an essential component of the Indian taxation system. It ensures that tax is collected at the source of income generation, simplifying the tax collection process and reducing tax evasion. Whether you’re an employer, contractor, or service provider, understanding how TDS works — and how to file it — is crucial to staying compliant with the law.

In this blog, we will walk you through everything you need to know about TDS filing in India, including its purpose, who should file it, deadlines, penalties, and the step-by-step process for filing TDS returns.

What is TDS?

Tax Deducted at Source (TDS) is a method where tax is deducted by the payer at the time of making specified payments such as salary, rent, interest, commission, etc. The deducted amount is then deposited with the government on behalf of the recipient.

Why is TDS Important?

• Ensures timely collection of taxes

• Minimizes the chances of tax evasion

• Provides a steady inflow of revenue to the government

• Helps the taxpayer avoid the burden of paying a lump sum at the end of the year

Who is Liable to Deduct TDS?

• Employers paying salaries

• Companies making payments to contractors or professionals

• Banks paying interest

• Individuals or HUFs (subject to certain thresholds) making rent or commission payments

Essentially, any person or entity making specified payments beyond the threshold limit is liable to deduct TDS and file returns.

TDS Return Filing: Key Points

Step-by-Step Process for Filing TDS Return

1. Collect and verify PAN details of all deductees.

2. Deduct TDS at the applicable rate while making payment.

3. Deposit the TDS to the government using Challan ITNS 281 within the due date.

4. Prepare the TDS return using Return Preparation Utility (RPU) and File Validation Utility (FVU).

5. Submit the return on the TIN-NSDL or TRACES portal.

6. After submission, download the acknowledgment and issue TDS certificates (Form 16/16A) to deductees.

Penalties for Non-Compliance

Failing to file TDS returns on time can lead to:

• Late filing fees under Section 234E: ₹200 per day (up to the amount of TDS)

• Penalty under Section 271H: ₹10,000 to ₹1,00,000 for incorrect or non-filing

• Interest on late deposit of TDS: 1%–1.5% per month depending on the delay

TDS Filing for Salaried Employees

Employers must deduct TDS from salaries monthly and file Form 24Q quarterly. Form 16 must be issued to employees before 15th June of the following financial year.

Common Mistakes to Avoid

• Quoting wrong PAN/TAN

• Delays in TDS deposit

• Filing incorrect TDS returns

• Not issuing TDS certificates to deductees

Conclusion

Filing TDS returns is a statutory obligation that helps maintain transparency and compliance in your business. While the process might seem technical, with proper planning and use of available tools, it becomes much simpler. Consider consulting a tax professional or using TDS filing software to streamline the process.