Deducting the tax is only half the obligation. It must be deposited by the due date and reported quarterly, or the expense itself can be disallowed.
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FREQUENCY
MAIN FORMS
DEPOSIT
CERTIFICATES
The correct section and rate are determined for each payment type. Applying the wrong section is a common source of later defaults.
Tax deducted must be deposited by the monthly due date. Interest runs from the date of deduction, not the date it was due.
The relevant form is filed with deductee-wise details, and challans are matched against the reported deductions.
Form 16 for salary and Form 16A for other payments are generated from TRACES and issued to deductees.
Most people focus on the late filing fee, which accrues per day until the return is filed. The more expensive consequence sits in the Income Tax Act: where TDS has not been deducted or not deposited, a portion of the corresponding expense can be disallowed when computing your business income. That means paying tax on money you actually spent. On a large contractor or professional fee payment, the disallowance routinely exceeds the late fee by a wide margin.
Any person making specified payments above the threshold, including companies, LLPs, firms and, in certain cases, individuals subject to audit.
Tax must be deducted at a higher rate, and the return cannot report a valid credit, so the deductee cannot claim it. Collect PAN before making payment.
A fee accrues for every day of delay until the return is filed, subject to a ceiling of the TDS amount, along with interest on late deposit.
A mismatch flagged by the department, usually a short deduction, short payment or challan mismatch. It is resolved by filing a correction return.
Yes. TDS is deposited and reported against a TAN, which is different from your PAN, and it must be obtained before the first deduction.
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