Key Takeaways
- Challan ITNS 281 is the payment form for depositing TDS/TCS under the Income Tax Act, 1961. From April 2026, Challan ITNS 281N applies for payments under the Income Tax Act, 2025.
- Pay TDS online through the e-Pay Tax portal at incometax.gov.in using TAN credentials. Payment modes include net banking, debit card, UPI, RTGS/NEFT, and bank counter.
- TDS must be deposited by the 7th of the month following deduction (April through February). March deductions are due by 30th April.
- Late deposit attracts 1.5% interest per month under Section 201(1A) / Section 393, calculated from the date of deduction to the date of deposit.
- Verify every payment on TRACES (tdscpc.gov.in) using BSR code, challan date, and serial number before filing your quarterly TDS return.
How to pay TDS online in India: Log in to incometax.gov.in with your TAN, select e-Pay Tax, choose Challan ITNS 281 (for payments up to March 2026) or ITNS 281N (April 2026 onwards), enter the assessment year or tax year, select the payment nature code, enter the amount, choose a payment mode, and complete the transaction. Download the challan receipt with BSR code and CIN for TRACES verification.
Every employer, company, and specified person deducting tax at source must deposit that TDS with the government using Challan ITNS 281. The challan is not a return. It is a payment slip. You deduct TDS from a payment (salary, rent, professional fees, contractor payments), and then you deposit the deducted amount to the government's account through this challan. Miss the deposit, and interest starts accruing from the date you made the deduction, not the date you realized you forgot.
From April 2026, the Income Tax Act, 2025 introduced Challan ITNS 281N with a restructured section and payment code system. If you are depositing TDS for Tax Year 2026-27 (FY 2025-26 onwards under the new Act), you use 281N. For earlier periods, you continue with 281.
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What Is Challan ITNS 281?
Challan ITNS 281 is the designated payment form for depositing TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) with the Central Government. It is prescribed under Rule 30 of the Income Tax Rules, 1962, and is used by every deductor holding a TAN (Tax Deduction and Collection Account Number).
The challan captures four critical pieces of information:
- TAN of the deductor (the entity depositing the tax)
- Assessment Year to which the deduction relates
- Nature of payment (section code identifying whether it is salary TDS, rent TDS, professional fees TDS, etc.)
- Amount breakup (TDS amount, surcharge, education cess, interest, and penalty if applicable)
If you have already used Challan 280 for income tax payments, the interface will look familiar. The key difference: Challan 280 uses PAN and is for your own tax. Challan 281 uses TAN and is for tax you deducted from others.
ITNS 281 vs ITNS 281N: What Changed from April 2026
The Income Tax Act, 2025 replaced the section numbering and structural framework of the 1961 Act. This required a new challan variant for TDS deposits relating to Tax Year 2026-27 onwards.
| Feature | ITNS 281 (Old) | ITNS 281N (New) |
|---|---|---|
| Governing law | Income Tax Act, 1961 | Income Tax Act, 2025 |
| Period reference | Assessment Year (e.g., AY 2025-26) | Tax Year (e.g., TY 2026-27) |
| TDS sections | 192, 194A, 194C, 194H, 194I, 194J, etc. | Sections 392, 393, 394 with payment codes 1001-1067 |
| Section codes per challan | One section code per challan | Up to 20 section codes per single challan |
| When to use | TDS for periods up to March 2026 | TDS for Tax Year 2026-27 onwards |
| Payment portal | e-Pay Tax at incometax.gov.in | Same portal, separate challan option |
Practical impact for deductors: If you are depositing TDS deducted in July 2026 (due by 7th August 2026), you select Challan ITNS 281N on the portal. If you are depositing a belated payment for TDS deducted in February 2026, you select the original ITNS 281 with the corresponding Assessment Year.
The multi-section capability of 281N is a genuine improvement. Under the old system, a company deducting TDS on salary (Section 192), professional fees (Section 194J), and rent (Section 194I) needed three separate challans. Under 281N, all three can be combined into a single challan with their respective payment codes (1001, 1022, 1018).
Step-by-Step: How to Pay TDS Online via e-Pay Tax
The e-Pay Tax portal at incometax.gov.in is the primary interface for TDS challan payments. Here is the complete process.
Step 1: Navigate to the e-Pay Tax Portal
Go to incometax.gov.in. On the homepage, find e-Pay Tax under the Quick Links section. Click it to open the payment interface. You do not need to log in to your income tax account for this step, but you will need your TAN.
Step 2: Enter TAN and Verify
Enter your 10-character TAN (e.g., HYDX12345A). Enter the registered mobile number for OTP verification. After OTP validation, you will see the challan selection screen.
Step 3: Select the Correct Challan Type
You will see a list of available challan types. Select:
- ITNS 281 if depositing TDS for assessment years up to AY 2026-27 (periods up to March 2026)
- ITNS 281N if depositing TDS for Tax Year 2026-27 onwards (April 2026 and later deductions)
Step 4: Fill the Challan Details
For ITNS 281, enter:
| Field | What to Enter |
|---|---|
| Tax Applicable | Select TDS (0020) or TCS (0021) |
| Assessment Year | The AY to which the deduction relates (e.g., 2026-27 for FY 2025-26) |
| Type of Payment | Select the section code (e.g., 194C for contractors, 194J for professionals) |
| Nature of Payment | Salary, interest, rent, professional fees, etc. |
| Amount | Enter TDS amount, surcharge (if applicable), health and education cess, interest, and penalty separately |
For ITNS 281N, the form uses:
| Field | What to Enter |
|---|---|
| Tax Applicable | TDS or TCS |
| Tax Year | The tax year under IT Act 2025 (e.g., TY 2026-27) |
| Payment Codes | Select one or more codes (1001 for salary, 1018 for rent, 1022 for professional fees, etc.) |
| Amount per code | Enter amounts against each selected payment code |
Step 5: Choose Payment Mode and Pay
Select your payment mode:
- Net Banking: Redirects to your bank's internet banking portal. Most banks support this.
- Debit Card: Visa/Mastercard/RuPay accepted. Processing fee may apply.
- UPI: Enter your UPI ID or scan the QR code on screen. Suitable for amounts up to Rs 1 lakh (bank-specific limits apply).
- RTGS/NEFT: For large amounts. Generate a mandate on the portal and complete the transfer through your bank.
- Pay at Bank Counter: Generate a challan counterfoil and deposit at an authorized bank branch. Available for non-corporate deductors.
Step 6: Download the Challan Receipt
After successful payment, the portal generates a receipt with:
- BSR Code (7-digit Basic Statistical Return code of the bank branch)
- Challan Serial Number
- CIN (Challan Identification Number)
- Date of deposit
- Amount deposited
Save this receipt. You will need the BSR code, serial number, and date when filing your quarterly TDS return (Form 26Q / Form 138) and when verifying the payment on TRACES.
TDS Payment Due Dates: Monthly Schedule
TDS must be deposited within the prescribed time limit. The due dates are uniform across all sections.
| Month of Deduction | Due Date for Deposit | Applicable Rule |
|---|---|---|
| April | 7th May | Rule 30, IT Rules 1962 / Rule 333, IT Rules 2026 |
| May | 7th June | Same |
| June | 7th July | Same |
| July | 7th August | Same |
| August | 7th September | Same |
| September | 7th October | Same |
| October | 7th November | Same |
| November | 7th December | Same |
| December | 7th January | Same |
| January | 7th February | Same |
| February | 7th March | Same |
| March | 30th April | Extended deadline for year-end processing |
Government deductors have different rules: TDS on salary must be deposited by the 7th of the following month, but non-salary TDS must be deposited on the same day as the deduction is made.
Example: Your company deducts Rs 50,000 as TDS under Section 194J on a professional fee payment made on 15th July 2026. You must deposit this amount to the government by 7th August 2026 using Challan ITNS 281N with payment code 1022.
Interest and Penalties for Late TDS Payment
Late TDS deposit triggers two separate consequences: interest on the delayed amount and potential penalty proceedings.
Interest Under Section 201(1A) / Section 393
| Scenario | Interest Rate | Period |
|---|---|---|
| TDS deducted but not deposited | 1.5% per month (or part of month) | From date of deduction to date of deposit |
| TDS not deducted at all | 1% per month (or part of month) | From date deduction was due to date of actual deduction |
Interest is calculated on a monthly basis. Even one day into a new month counts as a full month.
Worked example: You deducted Rs 1,00,000 TDS on 10th June 2026 but deposited it on 22nd September 2026.
- Period: June to September = 4 months
- Interest: Rs 1,00,000 x 1.5% x 4 = Rs 6,000
- You deposit Rs 1,06,000 (Rs 1,00,000 TDS + Rs 6,000 interest) via Challan 281N, entering Rs 1,00,000 in the TDS field and Rs 6,000 in the Interest field
Penalty Under Section 221 / Section 234E
Beyond interest, the Assessing Officer may impose a penalty equal to the amount of TDS in default under Section 221. Additionally, if the quarterly TDS return is filed late, Section 234E imposes a fee of Rs 200 per day until the return is filed, capped at the total TDS amount. The deposit delay and the return filing delay are separate liabilities.
For a detailed breakdown of interest on late TDS deposit, see our dedicated guide.
How to Verify TDS Payment on TRACES
After depositing TDS, verify the payment on TRACES before filing your quarterly return. Unmatched challans cause return rejection and processing delays.
Verification Steps
- Log in to TRACES at tdscpc.gov.in using your TAN, User ID, and password.
- Navigate to Statements/Payments in the top menu.
- Select Challan Status Enquiry (also called "View Challan Status").
- Enter the BSR code, challan tender date, and challan serial number from your payment receipt.
- The system displays the payment details: TAN, amount, section code, assessment year/tax year, and matching status.
- If the status shows "Matched", the challan is correctly linked to your TAN and can be used in your quarterly return.
- If the status shows "Unmatched" or the challan does not appear, contact the depositing bank or raise a challan correction request on TRACES.
Timing note: Allow 3 to 5 working days after the date of deposit for the challan to appear on TRACES. Payments made via net banking or UPI typically reflect within 24 to 48 hours.
You can also verify from the deductee's side by checking Form 26AS on the income tax portal (incometax.gov.in). Once the quarterly TDS return is filed and processed, the deducted amounts appear in Part A of the deductee's Form 26AS.
Common Mistakes in TDS Challan Filing
These errors consistently cause demand notices, return rejections, and unnecessary interest liability.
Wrong Assessment Year or Tax Year. Selecting AY 2025-26 instead of AY 2026-27 (or the wrong Tax Year on 281N) means the payment is credited to the wrong period. The correct period shows zero deposit, triggering a demand notice. Correction requires a challan rectification request on TRACES, which takes 15 to 30 days.
Incorrect TAN. A single-character error in the TAN routes the payment to a different deductor's account. Your account shows no deposit. Verify TAN character by character before submitting. If an error occurs, file an online correction request on TRACES under "Request for Correction."
Mixing up Major Head codes. TDS uses Major Head 0020. TCS uses Major Head 0021. If you select the wrong major head, the payment is classified under the wrong tax type and will not match your TDS return.
Using ITNS 281 for post-April 2026 deductions. Deposits for TDS deducted from April 2026 onwards should use ITNS 281N with the Tax Year reference. Using the old 281 form for new-period deductions may result in mismatched records on TRACES.
Not splitting interest from principal TDS. When depositing late, enter the TDS amount and interest amount in separate fields on the challan. If you enter the total (TDS + interest) in the TDS field alone, the interest portion is not properly recorded, and TRACES may still show an interest demand.
Depositing after the 7th without interest. If you deposit Rs 2,00,000 TDS on the 12th (five days after the 7th due date), you owe interest for one month at 1.5%. Depositing only the principal triggers an automatic interest demand during return processing.
Not retaining the challan receipt. The BSR code, date, and serial number from the receipt are mandatory fields in the quarterly TDS return (Form 26Q / Form 138). Without these, you cannot file the return. If you lose the receipt, retrieve the details from TRACES Challan Status or your bank's transaction history.
Let Tax Garden Handle Your TDS Deposits
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