Form 26QD: Due Date, Download, How to Fill Form 26QD?

The Union Budget 2019 introduced many changes, the major one being TDS, which is applicable to payments made to resident contractors. Under Section 194M of the Income Tax Act, individuals and HUFs paying over a threshold amount in a year for contractual work or professional services have to deduct TDS before making such payments. 

After deducting TDS (tax deducted at source), you need to file Form 26QD as a challan-cum-return statement. Read below to know about the purpose, due date and filing process of Form 26QD. 

Importance of Compliance with Form 26QD

Under Section 194M, Individuals or HUFs (not required to get their books of account audited) are required to deduct TDS on payments above Rs.50,00,000 made for certain contractual and professional work in a financial year. The deduction shall be made when the amount is credited to the recipient's account or when the payment is made (in cash, cheque, draft, or any other form), whichever is earlier. After deducting TDS, the deductor must deposit this amount to the government within the applicable due date.

While making TDS deposits,  you need to furnish a challan-cum-return statement via Form 26QD on the income tax portal for reporting transactions specified under Section 194M. 

In short, a payer or deductor must deduct TDS at applicable rates (5%) when making payments above Rs.50 lakh and deposit the amount while filing Form 26QD. Failure to do so will result in the levy of penalty on the concerned payer/deductor. Afterwards, the deductor must furnish a TDS certificate to the deductee/payee. 

Before the introduction of Section 194M and Form 26QD, Individuals or HUFs (who are not required to get their books of accounts audited) were not required to deduct tax at source for payments made to contractual and professional workers or commission or brokerage (other than Insurance commission). This allowed them to escape the levy of TDS, allowing for higher chances of tax evasion. 

Who Has to File Form 26QD?

Any individual or Hindu Undivided Family (not required to get their books of accounts audited)  liable to deduct TDS u/s 194M is responsible for filing Form 26QD.

Under Section 194M, any individual or Hindu Undivided Family (not required to get their books of accounts audited) making a total payment above Rs.50 lakh in a financial year to any resident for contractual work or professional services is the person responsible for filing Form 26QD. The word ‘contractual work’ may refer to any of the following:

• Catering services
• Broadcasting and telecasting, including the production of programs
• Advertisement-related services
• Carriage of goods and passengers (except carriage via railways)
• Manufacturing products from raw materials provided by a customer according to their specifications

Meanwhile, fees for ‘professional services’ refers to any service rendered by a person in the course of carrying on a

• Legal
• Medical
• Engineering
• Architectural
• Accountancy
•  Technical consultancy
• Interior decoration
• Any other professional service as notified by the government

How to File Form 26QD?

After deducting TDS on a prescribed payment, you must deposit the money to the government via Form 26QD. To file this form, follow these steps:

Step 1: Login to the income tax e-filing portal.

Step 2: Select the “e-Pay Tax” option from the e-file option.

Step 3: Click on New Payment.

Step 4: Find Form 26QD from the options and click on ‘Proceed’.

Step 5: You must fill in all required details in the given form. The following details need to be filled out in Form 26QD:

• Deductor’s full name and complete address with PIN
• Deductor’s mobile number and email ID
• Aadhaar number or PAN of the deductor
• Deductee’s name, address, mobile number and email ID
• Aadhaar number or PAN of the deductee
• Deductee’s PAN category and status
• The financial year for filing TDS
• Nature of payment
• Date of contract or agreement
• Amount paid or credited
• Date of payment or credit
• Whether nil or lower deduction u/s 197 is applicable
• Number of certificates issued u/s 197
• Aggregate of payment/credit during the period from 1st April to the end of the month in which the payment has been made /credited 
• TDS rate
• Date of TDS deduction
• Mode of payment
• Date of TDS deposit
• Details of TDS payment (amount, interest, fee, total payment)

Step 6: Click on ‘Submit’ to file Form 26QD.

Step 7: Click on ‘Continue’ after filing all the details.

Step 8: Select the mode of payment from the given options, such as net banking, debit card, pay at bank counter, RTGS/NEFT and payment gateway including UPI and credit card.

Step 9: Click on ‘Continue’ after selecting the payment mode.

Step 10: Select the option ‘Pay Now’ you will be redirected to the payment gateway of the mode of payment that you selected.

Step 11: After making the payment, you will be redirected to the e-filing portal. You can download the challan-cum-return statement from the portal.

Form 26QD TDS Payment

As mentioned before, the person deducting TDS on specific payments must deposit the amount while filing Form 26QD. The procedure to pay Form 26QD is mentioned above. 

Form 26QD Due Date

• For filing Form 26QD on payments made to resident contractors and professionals:

The due date is within 30 days from the end of the month in which you made the payment. For example, if you paid on 1^st December 2023, the due date for TDS payment is on or before 30^th January 2024.  

In addition to the above due dates, the deductor must remember to furnish Form No. 16 to the payee within 15 days of filing Form 26QD.

Penalty for Not Filing Form 26QD 

Certain penalties apply if a deductor fails to file Form 26QD within 30 days from the end of the month of TDS deduction. Under Section 234E of the Income-tax Act, late filing fees are levied on a defaulter at a Rs.200/day rate. This will apply every day after the due date till the deductor files TDS returns.

In addition, an assessing officer may direct a defaulter to pay a penalty u/s 271H for filing delayed or incorrect TDS returns. The minimum penalty u/s 271H is Rs.10,000 while the maximum penalty is Rs.1 lakh. However, one can avoid paying this penalty if he/she deposits the TDS and files TDS returns within a year from the due date. 

In summary, individuals and HUFs who have paid over Rs.50 lakh to resident contractors or professionals must deduct TDS and deposit the money. Form 26QD is a challan-cum-return statement for TDS deduction that deductors need to file within the given due dates. Otherwise, they will have to pay hefty fines for missing TDS payments.