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 vital to avoid penalties and interest for late filing.
Budget 2025 Update
The Union Budget 2025 proposed the rationalisation of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) to ease compliance challenges for taxpayers especially for middle-income earners. The government has raised the threshold limits across various TDS sections, aiming to simplify the tax process. The proposed changes are as follows
Section
Present
Proposed
193 - Interest on securities
NIL
10,000
194A - Interest other than Interest on securities
(i) 50,000/- for senior citizen;
(ii) 40,000/- in case of when payer is bank, cooperative society and post office
(iii) 5,000/- in other cases
(i) 1,00,000/- for senior citizen
(ii) 50,000/- in case of when payer is bank, cooperative society and post office
(iii) 10,000/- in other cases
194 – Dividend, for an individual shareholder
5,000
10,000
194K - Income in respect of units of a mutual fund
5,000
10,000
194B - Winnings from lottery, crossword puzzle Etc. &
194BB - Winnings from horse race
Aggregate of amounts exceeding 10,000/- during the financial year
10,000/- in respect of a single transaction
194D - Insurance commission
15,000
20,000
194G - Income by way of commission, prize etc. on lottery tickets
15,000
20,000
194H - Commission or brokerage
15,000
20,000
194-I - Rent
2,40,000 (in a financial year)
6,00,000 (in a financial year)
194J - Fee for professional or technical services
30,000
50,000
194LA - Income by way of enhanced compensation
2,50,000
5,00,000
206C(1G) – Remittance under LRS and overseas tour program package
7,00,000
10,00,000
Note:
- The Tax Collected at Source (TCS) will be removed on remittances made for educational purposes when these remittances are financed through loans from specified financial institutions (Section 80E).
- The Tax Collected at Source (TCS) on the purchase of goods will be removed, effective from April 1, 2025.
- The higher TDS rate will only apply in cases where taxpayers do not provide PAN.
Total amount paid during the quarter and TDS amount deducted on such payments have to be reported in 26Q.In this article, we will discuss about the following:
As against 24Q which contains 2 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.
The due date of filing form 26Q is as follows:
Quarter | Due Date |
April to June | 31st July |
July to September | 31st Oct |
October to December | 31st Jan |
January to March | 31st May |
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
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.
No penalty will be charged under 271H if –