Form 26Q: TDS Return Filing for Non Salary Deductions

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:

• Overview of Sections in Form 26Q
• Mandatory Fields in Form 26Q
• Interest for Delayed TDS Deduction or Deposit
• Penalties for late filing
• Important points
• FAQs

Sections Covered in 26Q

• 193 – Interest on securities
• 194 – Dividend
• 194A – Interest other than Interest on Securities
• 194B – Winnings from lotteries and crossword puzzles
• 194BB – Winnings from horse race
• 194C – Payment of contractor and subcontractor
• 194D – Insurance commission
• 194DA – Maturity of life insurance policy
• 194EE – Payment in respect of deposit under national savings scheme
• 194F – Payments on account of repurchase of Units by Mutual Funds or UTI 94F
• 194G – Commission, prize etc., on sale of lottery tickets
• 194H – Commission or Brokerage
• 194I(a) – Rent
• 194I(b) – Rent
• 194J – Fees for Professional or Technical Services
• 194K – Income in respect of units
• 194LA – Payment of Compensation on acquisition of certain immovable property
• 194LBA – Certain income from units of a business trust
• 194LBB – Income in respect of units of investment fund
• 194LBC – Income in respect of investment in securitization trust
• 194N – Payment of certain amounts in cash
• 194O – Payment of certain sums by e-commerce operator to e-commerce participant
• 194Q – TDS on purchase of goods
• 194R – TDS on benefit or perquisite in respect of business or profession
• 194S – TDS on transfer of Virtual Digital Assets 
• 197A – Details of payment where there is no deduction of tax in certain cases

Details to be Filled in 26Q

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.

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

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.

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