TDS Return Filing Guide: Form 24Q and 26Q for Employers and Businesses

TDS Return Filing Guide: Form 24Q and 26Q for Employers and Businesses

If your business deducts tax at source from salary payments, contractor invoices, rent, professional fees, or interest, you are required to file quarterly TDS returns with the Income Tax Department. These returns report every deduction made, every payment deposited with the government, and every deductee's details. Getting them right is critical: the returns feed directly into your employees' and vendors' Form 26AS and AIS, and errors can block their ITR processing.

This guide covers the two most common TDS return forms for Indian employers and businesses: Form 24Q for salary TDS and Form 26Q for non-salary domestic TDS.

Form 24Q: TDS on Salary

Form 24Q is filed by any employer who deducts TDS from salary payments under Section 192 of the Income Tax Act. This includes companies, LLPs, partnership firms, proprietorships, trusts, and government bodies.

What It Contains

Annexure I (filed every quarter):

• Deductor details: TAN, PAN, name, address
• Challan details: BSR code (7-digit bank branch code), challan serial number, date of deposit, amount deposited
• Employee-wise deduction details: employee PAN, name, TDS deducted during the quarter, date of deduction, and corresponding challan mapping

Annexure II (filed only with Q4):

• Full-year salary breakup for each employee: basic salary, allowances, perquisites, bonus, and other components
• Exemptions claimed: HRA under Section 10(13A), LTA, standard deduction under Section 16(ia) (Rs 75,000 under the new regime, Rs 50,000 under the old regime)
• Income from other sources reported by the employee (interest, rental income, etc.)
• Deductions under Chapter VI-A: Section 80C (Rs 1.5 lakh cap), 80D (health insurance), 80TTA/80TTB, and others
• Tax computation: total income, tax payable, rebate under Section 87A, surcharge, health and education cess, total TDS deducted, and shortfall or excess
• Tax regime selected by the employee (old or new)

Annexure II is the foundation for Part B of Form 16, which the department auto-generates from your filed Q4 return. If you make errors in Annexure II, your employees receive incorrect Form 16 certificates, which cascades into problems when they file their own ITRs.

Who Must File

Any person (including companies, firms, trusts, government departments, and individuals subject to tax audit) who pays salary and deducts TDS under Section 192.

If you have even one employee from whom TDS is deducted during a quarter, you must file Form 24Q for that quarter. If no salary TDS is deducted in a quarter (all employees below the taxable threshold), a nil return is not mandatory but is recommended to maintain a clean compliance record.

Form 26Q: TDS on Non-Salary Payments

Form 26Q covers TDS on all domestic payments other than salary. This is the form most small and medium businesses interact with frequently because it covers the common payment categories.

Sections Covered by Form 26Q

These are standard rates. If the deductee does not furnish a PAN, TDS is deducted at 20% (or the applicable rate, whichever is higher) under Section 206AA.

What It Contains

• Deductor details (TAN, PAN, name, address)
• Challan details for each TDS deposit made during the quarter
• Deductee-wise details: PAN of the deductee, name, section under which TDS was deducted, date of payment/credit, amount paid, TDS amount deducted, date of deduction, and challan mapping
• Lower deduction certificate details (Section 197) if applicable

Relationship to Form 16A

Just as Form 24Q feeds Form 16 (salary TDS certificate), Form 26Q feeds Form 16A (non-salary TDS certificate). After you file Form 26Q, the department generates Form 16A for each deductee, which they can download from TRACES. You are required to issue Form 16A to each deductee within 15 days of the due date of filing the TDS return.

Quarterly Due Dates for FY 2025-26

These dates apply equally to Form 24Q, Form 26Q, Form 27Q (TDS on payments to non-residents), and Form 27EQ (TCS returns).

The Q4 deadline of May 31 is particularly important because it triggers the generation of Form 16 and Form 16A for the entire financial year. Delayed filing means your employees and vendors cannot download their TDS certificates on time, which delays their ITR filing.

How to File a TDS Return: Step by Step

Step 1: Gather Your Data

Before opening any software, collect:

• TAN (Tax Account Number) of the deductor
• PAN of every deductee (employee, contractor, vendor, landlord)
• Challan details for every TDS deposit made during the quarter: BSR code (7-digit code of the bank branch where challan was deposited), challan serial number, date of deposit, and amount. Cross-check these against your bank statements or the OLTAS challan status on the NSDL Protean website.
• For Q4 Form 24Q: employee salary breakup, investment declarations, deductions claimed, and tax regime selected

Step 2: Download the Return Preparation Utility (RPU)

The NSDL Protean (formerly TIN-NSDL) provides a free Return Preparation Utility (RPU) for preparing TDS returns. Download the latest version from the Protean TIN website (tinpan.proteantech.in). The RPU is a Java-based desktop application.

Alternatively, if you use accounting or payroll software (Tally, Zoho Payroll, GreytHR, RazorpayX Payroll), most can export the TDS return file directly in the FVU format.

Step 3: Enter Data in the RPU

1. Open the RPU and select the form type (24Q or 26Q).
2. Enter the financial year (2025-26) and quarter (Q4 for the current deadline).
3. Fill in the deductor details: TAN, PAN, name, and address.
4. Go to the Challan Details tab and enter each challan. The BSR code, serial number, and date must match the bank records exactly. Mismatches are the single most common reason for return rejection.
5. Go to the Deductee Details tab and enter each deductee with their PAN, amount paid, TDS deducted, date of deduction, and the challan against which the deposit was made.
6. For Q4 Form 24Q, fill in Annexure II with the full-year salary computation for each employee.

Step 4: Validate the File

Click Validate in the RPU. The utility checks for:

• Invalid or inactive PANs
• Challan amounts that do not match the sum of deductee-wise TDS mapped to that challan
• Missing mandatory fields
• Incorrect section codes
• Date inconsistencies (deduction date before the quarter start, deposit date before deduction date)

Fix all errors until validation passes with zero errors and zero warnings.

Step 5: Generate the FVU File

Click Create File to generate the FVU (File Validation Utility) output. This produces a .fvu file that you will upload.

Step 6: Upload to TRACES / e-Filing Portal

There are two upload routes:

Through TRACES 2.0:

1. Log in to tdscpc.gov.in with your TAN.
2. Go to Statement/Payment > Upload Statement.
3. Select the form type, FY, and quarter.
4. Upload the .fvu file.
5. Enter the provisional receipt number from the last filed return for the same form (for correction statements) or select "Regular" for first-time filing.
6. Verify and submit.

Through the Income Tax e-Filing Portal:

1. Log in to incometax.gov.in with the TAN.
2. Go to e-File > e-File TDS.
3. Upload the .fvu file and submit.

After upload, you receive a token number for tracking. The return is processed within a few days, and Form 16/16A certificates are generated on TRACES.

Step 7: Download and Issue TDS Certificates

After the return is processed:

• For Form 24Q: download Form 16 Part A from TRACES. Part B is auto-populated from Annexure II. Issue the complete Form 16 to each employee.
• For Form 26Q: download Form 16A from TRACES and issue to each deductee.

The deadline to issue Form 16 is June 15 of the year following the financial year (June 15, 2026 for FY 2025-26). Form 16A must be issued within 15 days of the TDS return filing due date.

Penalties for Late Filing and Non-Filing

Section 234E: Late Filing Fee

A fee of Rs 200 per day is charged for every day of delay from the due date until the date the return is actually filed. The fee is capped at the total TDS amount reported in the return.

Example: If your Q4 Form 26Q has total TDS of Rs 50,000 and you file it 30 days late, the fee is Rs 200 x 30 = Rs 6,000. Since Rs 6,000 is less than Rs 50,000, you pay Rs 6,000.

The Section 234E fee must be paid before the return can be filed. The portal will not accept the return upload until the late fee challan is deposited.

Section 271H: Penalty for Non-Filing or Incorrect Filing

If a TDS return is not filed within one year from the due date, the Assessing Officer can levy an additional penalty of Rs 10,000 to Rs 1,00,000. This is over and above the Section 234E late fee.

Section 271H also applies if the return contains incorrect information (wrong PAN, wrong amount, wrong section code). However, no penalty is imposed if you:

• Pay the TDS amount along with interest and late fees
• File the return (or correction statement) within one year from the due date

Section 201(1A): Interest on Late Deposit

Separate from the return filing penalties, interest applies on late TDS deposits:

• 1% per month (or part of month) if TDS is deducted late (from the date it should have been deducted to the date of actual deduction)
• 1.5% per month (or part of month) if TDS is deducted on time but deposited late (from the date of deduction to the date of deposit with the government)

Common Filing Mistakes to Avoid

Challan mismatch: The BSR code, serial number, and amount on the return must exactly match what the bank reported in OLTAS. Even a one-digit error in the BSR code causes rejection. Always verify challans on the OLTAS challan status inquiry before filing.

Invalid PAN: If a deductee's PAN is inactive, surrendered, or does not match the name, the return will either be rejected or the deductee will not get credit in their 26AS. Verify PANs using the PAN verification service on Protean or the e-filing portal before filing.

Annexure II omission in Q4: Some filers submit Q4 Form 24Q without filling Annexure II. This blocks Form 16 Part B generation, and employees cannot download their complete TDS certificates.

Wrong section code: Deducting under Section 194J instead of 194C (or vice versa) is a frequent error, especially for payments to contractors who also provide technical services. The section determines the applicable rate and the deductee's reporting in their ITR.

Not filing nil returns: While nil returns are not strictly mandatory, not filing them can trigger notices from the TDS Assessing Officer, especially if TDS deposits exist on your TAN from previous quarters. Filing nil returns maintains a clean compliance trail.

Tax Garden Handles Your TDS Returns

Tax Garden's compliance services include end-to-end TDS return preparation and filing. We reconcile your challans against OLTAS, validate PANs, prepare Annexure II salary computations, file the returns on TRACES, and issue Form 16 and Form 16A to your employees and vendors on time.

For related compliance, see our guides on TDS rate chart for FY 2026-27, TDS and TCS changes for FY 2026-27, TDS section mapping under the new Act, and the new TDS payment codes. For payroll-related compliance, see our PF and ESI guide and professional tax state-wise rates.

Frequently Asked Questions

What is the difference between Form 24Q and Form 26Q?

Form 24Q is for TDS deducted on salary payments under Section 192. Form 26Q is for TDS on all other domestic payments: contractor fees (194C), rent (194I), professional fees (194J), interest (194A), commission (194H), and others. Employers who pay salaries and also make non-salary payments must file both forms every quarter.

What is Annexure II in Form 24Q and why does it matter?

Annexure II is a detailed salary and tax computation filed only with the Q4 (January to March) return. It contains the full-year salary breakup, exemptions, deductions, and tax calculation for each employee. The Income Tax Department uses it to generate Part B of Form 16. If Annexure II is missing or incorrect, your employees get incomplete or wrong Form 16 certificates.

What is the penalty for late filing of TDS returns?

Section 234E imposes a late fee of Rs 200 per day from the due date until the return is filed, capped at the total TDS amount. Additionally, Section 271H allows a penalty of Rs 10,000 to Rs 1,00,000 if the return is not filed within one year. Interest under Section 201(1A) at 1% to 1.5% per month also applies on late TDS deposits.

Can I file a correction statement if I made an error in the TDS return?

Yes. Log in to TRACES, go to Statement/Payment > Request for Correction, select the form, FY, and quarter, and download the consolidated file. Make corrections in the RPU and upload the corrected FVU file. There is no limit on the number of corrections, but each must be filed sequentially.

Is nil TDS return filing mandatory?

No, nil returns are not legally mandatory. However, if your TAN has past TDS deposits or the TDS Assessing Officer expects a return, not filing a nil return may trigger a notice. Filing nil returns is recommended to maintain a clean compliance record.

When should I issue Form 16 to employees for FY 2025-26?

Form 16 must be issued by June 15, 2026 for FY 2025-26. Part A is downloaded from TRACES after the Q4 Form 24Q is processed. Part B is auto-generated from Annexure II. The complete Form 16 (Part A + Part B) is issued to each employee from whom TDS was deducted.

Sources

This guide is verified against the TDS return filing instructions on the NSDL Protean (TIN) portal, the TRACES user manual for statement upload and Form 16/16A generation, Sections 192, 194A, 194C, 194H, 194I, 194J, 194N, 194Q, 200, 201(1A), 206AA, 234E, and 271H of the Income Tax Act 1961, and Rule 31A of the Income Tax Rules. Cross-checked against ClearTax, Tax2win, BajajFinserv, IndiaFilings, and TDSMAN coverage as of May 2026. Due dates, penalty rates, and section references should be confirmed against incometaxindia.gov.in and the latest Finance Act before filing.