Most TDS defaults are not caused by unwillingness to pay. They are caused by a payment category nobody realised was covered, a PAN that was one character wrong, or a deposit that missed the 7th by a day. The tax is your vendor's money passing through your hands; the interest, the daily fee and the penalty are yours alone. This service exists so those three never arise.
TDS Is The Cheapest Tax To Pay And The Most Expensive To Get Wrong.
The tax itself is your vendor's money, not yours. Everything below is what it costs you personally for handling it late or incorrectly.
Per Month, Deducted But Not Deposited
Interest runs from the date of deduction to the date of deposit under Section 201(1A). Part of a month counts as a full month, so a two-day delay across a month end costs a full month's interest.
Per Month, Not Deducted At All
Charged from the date the deduction should have been made until it is actually made. This is the more common failure, and it usually surfaces only at audit.
Per Day, Late Quarterly Return
Section 234E runs every day the return is outstanding, capped at the TDS amount itself. It is mandatory and cannot be waived on reasonable cause.
Maximum Penalty, Section 271H
Between ₹10,000 and ₹1,00,000 for a late or incorrect statement, at the assessing officer's discretion. Not levied if the return is filed within a year with tax, interest and fee paid.
Penalty For Failing To Deduct, Section 271C
A penalty equal to the entire tax you should have deducted. On a year of unnoticed contractor payments this is frequently the largest number on the page.
TRACES Defaults Compound
An uncorrected short-deduction or PAN error generates a demand that reappears every quarter until a correction statement is filed. They do not resolve themselves.
If You Pay Salaries Or Vendors, This Applies To You.
TDS obligations attach to the payer, not the payee. Most defaults come from businesses that did not know a payment category was covered.
Companies And LLPs Running Payroll
Salary TDS under the Section 393 salary provisions, monthly deposits, quarterly Form 24Q, and Form 16 issued to every employee by 15 June.
Anyone Paying Contractors Or Professionals
Contractor payments are covered above ₹30,000 for a single payment or ₹1,00,000 in aggregate across the year. Professional fees are covered above ₹50,000.
Businesses Paying Rent Or Commission
Rent is now tested monthly: TDS applies where rent exceeds ₹50,000 in any single month, replacing the old ₹2,40,000 annual test. Commission and brokerage are covered above ₹20,000.
Anyone Remitting Money Abroad
Payments to non-residents require rate determination and a treaty benefit assessment before the remittance leaves, together with Form 15CA and 15CB. Getting this wrong after the fact is expensive.
What We Will Need From You.
Send what you have. We will tell you what is missing rather than handing you a checklist to decode.
Setting Up
- PAN and TAN of the deductor
- Certificate of incorporation or partnership deed
- Authorised signatory details and DSC
- TRACES and income tax portal credentials
- List of payment categories
- Prior quarter returns, if any
Every Month
- Payment register for the month
- Vendor and employee PAN records
- Salary sheet with declarations
- Rent and lease agreements
- Contractor invoices
- Bank statement for the deposit
For Corrections
- TRACES default or demand notice
- Justification report from TRACES
- Original return acknowledgement
- Challan details, CIN and BSR
- Corrected PAN where mismatched
- Deductee confirmations
Three Stages. You Approve Before Anything Is Deposited.
- 01
Applicability Review
We register your TAN if you do not have one, then work through every payment category you actually make and identify which are covered, at what rate, and from what threshold. Foreign payments get a separate treaty assessment.
- 02
Monthly Deposit, Quarterly Return
We compute the deduction on each category, prepare the Challan 281 deposit before the 7th, and file the quarterly return, Form 24Q for salary, 26Q for other residents, 27Q for non-residents. You see the figures before the money moves.
- 03
Certificates And Defaults
Form 16 and 16A are generated from TRACES and issued within the statutory window. If a demand or short-deduction notice appears, we read the justification report, file the correction statement, and close it.
Six Reasons This Costs Less Than A Single Default.
Deadlines Are Ours, Not Yours
You do not get a reminder that a deposit is due. It is deposited. The 7th of every month and the four quarterly dates are our calendar to manage, not something we ask you to remember.
Reconciled Before Filing
Returns are checked against challan data, the deduction register and deductee PANs before submission. Most TRACES defaults are PAN errors, and they are far cheaper to catch before filing than after.
Section 393 Transition Handled
From 1 April 2026 the entire 194 series sits under Section 393. The transactions have not changed but the citations have, and a return quoting the old numbering invites a correction cycle.
Foreign Payments Assessed Properly
Treaty rates, Form 15CA and 15CB, and permanent establishment questions are handled by a lawyer before the remittance, not explained to the bank afterwards.
Notices Answered, Not Forwarded
A TRACES demand is analysed, the correction statement is filed, and the default is closed. You are told what happened, not sent the notice with a question mark.
Form 16 Right The First Time
Generated from TRACES with reconciled data and issued by 15 June. Employees do not come back in July because the figures do not match their payslips.
The Dates That Do Not Move
Monthly Deposit
TDS deducted in any month must reach the government by the 7th of the following month. For March the date is 30 April.
Q1 Return, April–June
Form 24Q, 26Q and 27Q for the first quarter.
Q2 Return, July–September
Interest and the ₹200 daily fee both begin the day after.
Q3 Return, October–December
The quarter that most often carries year-end contractor payments.
Q4 Return, January–March
The final quarter, and the return that feeds every employee's Form 16.
Form 16 To Employees
Salary certificates for the year just ended. Form 16A follows within 15 days of each quarterly return's due date.
Asked By Every Deductor.
Fifteen Minutes. Bring Your Last TRACES Statement.
Tell us what you pay out and we will tell you what is covered, what is exposed, and what it would cost to put right.
or email us at consult@dhull.in