Quick answer
The TDS cycle has five steps: deduct tax at the correct section when you pay or credit an expense, deposit it with a challan by the due date, file the quarterly statement (24Q for salary, 26Q for other resident payments, 27Q for non-residents), issue Form 16 or 16A, and reconcile with Form 26AS or AIS.
The five-step cycle
- ✓Deduct: identify the correct section and rate when you pay or credit the expense, and collect PAN details.
- ✓Deposit: pay the tax through a challan within the due date.
- ✓File: submit the quarterly statement (24Q, 26Q or 27Q) with challan details and deductee data.
- ✓Certify: issue Form 16 for salary and Form 16A for other payments from TRACES.
- ✓Reconcile: check that deductees see the credit in Form 26AS or AIS and correct any mismatch.
Which form for what
| Form | Used for |
|---|---|
| 24Q | TDS on salaries |
| 26Q | TDS on payments to residents other than salary |
| 27Q | TDS on payments to non-residents |
| 27EQ | TCS statement |
| Form 16 | Certificate for salary TDS |
| Form 16A | Certificate for non-salary TDS |
Where teams go wrong
- ✓Using the wrong section for a payment, leading to short deduction.
- ✓Late deposit or filing, leading to interest and fees.
- ✓Wrong PAN or missing PAN, leading to higher deduction and credit problems.
- ✓No monthly check of challans against the books and returns.
- ✓Never reconciling with 26AS or AIS until the deductee complains.
Rates, thresholds and dates
Rates, thresholds and due dates are updated regularly. Use the Income Tax portal or your CA for the current figures. Our training shows your team how to check them and build a calendar so nothing is missed.
Want your whole team to work this way?
We teach this hands-on, onsite at your office, and test every trainee. See Corporate TDS and TCS training for your accounts team.
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