Filing Form 26Q is a crucial obligation for any payer who deducts Tax Deducted at Source (TDS) on payments other than salary. This quarterly return provides the Income Tax Department with essential information about various payments, ensuring transparency and compliance with tax regulations. Understanding how to accurately file Form 26Q is crucial to avoid penalties and interest for late filing.

The total amount paid during the quarter and TDS deducted on such payments have to be reported in 26Q.

TDS Sections Covered in 26Q

Details to be Filled in 26Q

As against 24Q which contains 3 annexures, Form 26Q contains only one annexure. Challan details (BSR code, date of payment, total amount etc.), details of deductor and deductees are to be mentioned. Along with this, if the deductor hasn’t either deducted TDS or deducted it at a lower rate, reasons are also to be mentioned in the form.

Due Date of Filing 26Q

The due date of filing form 26Q is as follows:

Interest for Late Deduction or Late Deposit

If TDS is not deducted – 1% per month, from due date of deduction to actual date of deduction

If TDS is deducted but not deposited – 1.5% per month, from actual date of deduction to actual date of payment

If TDS is not deducted or deposited, the expense will be disallowed for computing taxable income:

• For Payments made in India: If TDS is required but not deducted, 30% of the expense amount will be disallowed when computing taxable income.
• For Payments made outside Indian: The entire amount of the expense on which TDS was required but not deducted will be disallowed.

Penalties for Late Filing of 26Q

Late Filing Fees – under section 234E, a fine of Rs. 200 per day is to be paid until the return is filed. This amount has to be paid for each day until total fine becomes equal to the TDS amount.

The penalty under 271H – In addition to fees to be paid under 234E, AO may charge the penalty of minimum Rs. 10,000 and maximum Rs. 1,00,000.

Failure to remit TDS to the government's credit within the prescribed timeframe can result in rigorous imprisonment ranging from 3 months to 7 years, along with a fine.

No penalty will be charged under 271H if –

• TDS is deposited to the government
• Late filing fees and interest (if any) is also deposited,
• Return is filed before expiry of 1 year from due date

Points to Remember

• Verify all the PAN numbers,
• Verify the challans, and try to match them through OLTAS or NSDL
• Signed Form-27A is to be filed with the TDS return