TDS and TCS filing and Assessment Services in Raipur
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Summary
TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) are two of the most frequent — and most penalty-prone — compliance obligations a business carries. Both require deducting or collecting tax at the moment a transaction happens, depositing it with the government within days, and filing a quarterly return that ties it all together. Miss a due date and the penalties are automatic, not discretionary. Tulshyan & Co. manages end-to-end TDS/TCS compliance for businesses across Raipur, including the transition to the new section numbering under the Income-tax Act, 2025.
TDS vs TCS — The Basic Difference
- TDS is deducted by the person making a payment (salary, rent, professional fees, contractor payments, etc.) before paying the recipient, and deposited with the government on the recipient's behalf.
- TCS is collected by the seller from the buyer at the time of sale (on specified goods, motor vehicles above a threshold, foreign remittances under LRS, and similar transactions), and deposited with the government.
- Both ultimately show up as tax credit in the recipient's/buyer's Form 26AS or Annual Information Statement, adjustable against their final tax liability.
Important: New Section Numbering Under the Income-tax Act, 2025
Effective 1st April 2026, the Income-tax Act, 2025 replaced the erstwhile Income-tax Act, 1961. As part of this, the familiar TDS/TCS sections have been restructured:
- Salary TDS (formerly Section 192) now falls under Section 392.
- All other TDS (formerly the 194-series — 194A, 194C, 194H, 194I, 194J, 194Q, and others) is now consolidated under Section 393, identified by numeric payment codes rather than separate section numbers.
- TCS (formerly Section 206C) now falls under Section 394.
- Rates and thresholds are largely unchanged from the old 194-series — this is a structural renumbering, not a substantive rewrite of the rules. The old section numbers (194C, 194J, etc.) remain useful for recognition and are referenced below, since most people — including in banking and accounting software — still use them in practice.
- Returns for FY 2025-26 (period ending 31st March 2026) were filed on the old forms; returns from FY 2026-27 onward use the new form numbers.
Major TDS Sections (Old Reference) & What They Cover
- Section 192 (Salary): Deducted based on the employee's estimated total taxable income for the year, at applicable slab rates — not a fixed percentage.
- Section 194A (Interest other than on securities): Applies to interest paid by banks, companies, and others above the prescribed threshold, generally at 10% for resident payees.
- Section 194C (Payments to contractors): 1% where the payee is an individual/HUF, 2% for others, on contract payments above the prescribed per-payment or aggregate threshold.
- Section 194H (Commission or brokerage): 2%, applicable once payments to a single payee exceed the threshold (currently ₹20,000 in a financial year) in a year.
- Section 194I (Rent): 2% for rent of plant, machinery, or equipment; 10% for rent of land, building, furniture, or fittings — applicable once monthly rent exceeds the prescribed threshold (currently ₹50,000 per month).
- Section 194J (Professional or technical fees): 10% for professional services and most royalties; 2% for technical services, call centre operations, and certain other specified payments — threshold currently ₹50,000 in a financial year.
- Section 194Q (Purchase of goods): 0.1% on purchases from a single seller exceeding ₹50 lakh in a financial year, applicable where the buyer's turnover in the preceding year exceeded ₹10 crore.
- Section 194-IA (Purchase of immovable property): 1% on sale consideration or stamp-duty value, where the value is ₹50 lakh or more — deducted by the buyer and deposited using Form 26QB, without needing a TAN.
- Section 195 (Payments to non-residents): Rates vary significantly by the nature of the payment (interest, royalty, fees for technical services, etc.) and applicable Double Taxation Avoidance Agreement (DTAA) benefits — this is one of the more complex TDS provisions and usually needs case-specific analysis, often alongside a Form 15CA/15CB (now Form 145/146) certification.
Rates and thresholds above are indicative and subject to periodic revision — always confirm the current rate at the time of deduction, since even small changes materially affect compliance.
Major TCS Provisions
- Sale of specified goods (such as scrap, certain minerals, and forest produce) at prescribed rates.
- Sale of motor vehicles where the sale value exceeds ₹10 lakh, at 1%.
- Foreign remittances under the Liberalised Remittance Scheme (LRS) and overseas tour packages — rates and thresholds here have changed more than once in recent years and should always be checked against the current notification before a remittance is made.
- Sale of goods by a seller with turnover above the prescribed threshold, where the buyer's aggregate purchases exceed ₹50 lakh in a year (largely mirroring the TDS obligation under the purchase-of-goods provision, with rules coordinating which side applies where both could otherwise apply).
When TDS/TCS Must Be Deducted or Collected
- TDS is deducted at the time of payment or credit to the payee's account, whichever is earlier — meaning even booking an expense as payable in your books (before actual payment) can trigger the deduction obligation.
- TCS is collected at the time of sale/receipt, per the specific provision governing that transaction.
- This timing rule catches out many businesses that deduct TDS only when they actually pay, rather than when the liability is first recorded in the books.
Deposit Due Dates
- For most deductors: TDS/TCS deducted or collected in a month must be deposited with the government by the 7th of the following month.
- For deductions made in March: the deposit deadline is extended to 30th April of the following financial year.
- Government deductors depositing via book entry (treasury challan): generally required to deposit on the same day as deduction, with a March-specific extension to 7th April.
Quarterly Return Filing Due Dates
- Q1 (April–June): due by 31st July.
- Q2 (July–September): due by 31st October.
- Q3 (October–December): due by 31st January.
- Q4 (January–March): due by 31st May.
- Forms: Form 24Q (salary — now Form 138), Form 26Q (non-salary payments to residents — now Form 140), Form 27Q (payments to non-residents — now Form 144), Form 27EQ (TCS — now Form 143). Returns for FY 2025-26 were filed on the old form numbers; FY 2026-27 returns onward use the new ones — worth confirming which applies before filing if you're unsure.
The Compliance Procedure, Step by Step
- Obtain and maintain a TAN (Tax Deduction and Collection Account Number) — mandatory before any TDS/TCS can be deducted or deposited (except for certain individual buyers under Section 194-IA, who can use their PAN instead).
- Deduct or collect tax at the applicable rate at the time payment is made or credited, whichever is earlier.
- Deposit the amount with the government using the appropriate challan, within the deposit due date.
- File the quarterly return in the correct form, reporting each deduction/collection along with the deductee's PAN and challan details.
- Issue TDS/TCS certificates to the deductee — Form 16 for salary (annually), Form 16A for other payments (quarterly), and Form 16B for property purchases — so they can claim credit when filing their own return.
- File correction statements where needed, to fix PAN errors, challan mismatches, or incorrect deduction amounts identified after the original return is processed.
Consequences of Getting It Wrong
- Interest on late deposit (Section 201(1A)): 1.5% per month or part thereof, calculated from the date of deduction to the date of actual deposit — not from the due date, so even a deposit made a few days into a new month can attract a full month's interest.
- Late filing fee (Section 234E): ₹200 per day of delay in filing the quarterly return, capped at the total TDS/TCS amount for that quarter — this fee is mandatory and cannot be waived.
- Penalty for non-filing or incorrect filing (Section 271H): ranging from ₹10,000 to ₹1,00,000, in addition to the late filing fee.
- Disallowance of the underlying expense: if TDS that should have been deducted on a business expense isn't deducted (or is deducted but not deposited), a portion of that expense can be disallowed while computing business income — turning a compliance lapse into a direct tax cost.
What Gets Checked at Assessment — TDS/TCS Assessment Points
- TDS/TCS compliance doesn't end with filing the return — it resurfaces directly during income tax assessment, both for the deductor and the deductee. These are the points that come up most often:
- Section 40(a)(ia) disallowance (residents): If TDS on interest, commission, brokerage, professional/technical fees, rent, or contractor payments to a resident is not deducted, or is deducted but not deposited by the income tax return due date under Section 139(1), 30% of that expense is disallowed and added back to taxable income during assessment. If the pending TDS is deposited in a later year, the disallowed amount can be claimed as a deduction in that later year.
- Section 40(a)(i) disallowance (non-residents): The equivalent default on payments to non-residents is far more severe — 100% of the expense is disallowed, not 30%, if TDS wasn't deducted at all.
- TDS credit mismatch: One of the most common assessment adjustments happens when the TDS credit a taxpayer claims in their return doesn't match what's reflected in Form 26AS/AIS — usually because the deductor filed an incorrect or late TDS return, used the wrong PAN, or simply hasn't filed yet. This is worth checking from both sides: as a deductor, whether your returns correctly reflect every deductee's PAN; as a deductee, whether your claimed credit actually reconciles.
- Cross-verification against Form 3CD/books: Assessing officers routinely compare the payee-wise data reported in your quarterly TDS returns against the expense figures in your books of account and tax audit report (Form 3CD) — a mismatch here (expenses claimed without a corresponding TDS return entry, or vice versa) is a common trigger for further scrutiny.
- PAN verification (Section 206AA): Where a deductee's PAN is invalid or not furnished, the deductor is required to apply the higher of the prescribed rate, the rate in force, or 20% — and assessment can flag cases where a lower rate was applied without proper PAN verification at the time of deduction.
- Assessee-in-default status (Section 201): If a deductor fails to deduct TDS correctly, or deducts but doesn't deposit it, the department can treat the deductor themselves as an "assessee in default" and raise a direct demand — with interest — independent of whatever happens in the payee's own assessment. This is a separate liability, not just a procedural footnote.
TDS & TCS Compliance Services by Tulshyan & Co.
- Tulshyan & Co., Chartered Accountants in Kamal Vihar, Raipur, manages TDS and TCS compliance for businesses across Chhattisgarh — correct rate and threshold application, on-time deposits, accurate quarterly returns, and timely Form 16/16A issuance, including the transition to the new Income-tax Act, 2025 section and form numbers.
Get in touch with Tulshyan & Co. to set up or take over your TDS/TCS compliance.
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