TDS Compliance

194N TDS Section

What Is TDS Compliance?

The term TDS refers to Tax Deduction at Source. This implies that when an Individual, Organisation, or Person makes a defined payment to another Person as required by the Income Tax Act of 1961, that Person must deduct TDS if the payment exceeds the threshold limit. The Income Tax Act of 1961 mentions these rates and threshold amounts.

The amount of tax withdrawn from money paid when making certain payments, such as rent, commission, professional fees, salary, interest, and so on, is known as TDS or Tax withdrawn at Source. Let us delve deeper and know all about TDS compliance.

When a salary or life insurance policy is paid, TDS is subtracted. After that, the TDS amount is filed with the Income Tax division. One way to automatically pay the income tax department a percentage of your taxes is through TDS. TDS is, therefore, thought of as a way to decrease tax evasion.

Example: The property owner receives a monthly office rent payment from Shine Pvt Ltd of Rs 80,000. Ten percent of TDS must be subtracted. After deducting Rs 8000 for TDS, Shine Pvt Ltd must pay the remaining Rs 72,000 to the property owner. Therefore, after deducting taxes at the source, the income receiver in the scenario above—the property owner—receives Rs 72,000. He will include the gross amount of Rs 80,000 in his income and be able to claim a credit for the Rs 8,000 that Shine Pvt Ltd has already deducted from his ultimate tax due.

Important forms for TDS deductions

When the paying authority is paying the beneficiary, they must deduct TDS. To report and file TDS compliances, utilise the following TDS forms:

  • Form 24Q: Employers or business units use this form only to record TDS deductions on routine business transactions such as commission payments, brokerage fees, and salary payments.
  • Form 26Q: Transactions other than salary deductions are reported on this form.
  • The form for reporting taxes collected at source is Form 27 EQ.
  • Form 27A: Submitting the TDS Return.
  • A TDS Certificate (Form 16/Form 16A) was issued following the TDS deduction.

TDS compliance for private limited company

TDS provides a consistent stream of income for the government. The deducting business may make payments in quarterly instalments and submit reports for each deposit made, even if it is not required to pay the whole amount of TDS in one go. TDS compliance for private limited company proceeds as follows:

  • TDS Deduction: When paying for items beyond certain criteria, such as wages, contractor payments, rent, professional fees, etc., the business must deduct TDS at the rates outlined in the TDS 192a compliance act under the Income Tax Act 1961.
  • TDS Payment: Following the TDS deduction, the business must pay the tax amount to the government within the deadlines set by the Income Tax Department. Challans intended for TDS payments must be used to make the TDS payments.
  • Filing TDS Returns: Using Form 24Q for salaries, Form 26Q for non-salary payments to residents, and Form 27Q for payments to non-residents, the business must file TDS returns every quarter. The TRACES site should be used to file these returns electronically by the deadlines.
  • TDS Certificate Issuance: Within the allotted period, the business must provide the deductees with TDS certificates (Form 16A for non-salary payments and Form 16 for salary payments). The tax withheld and deposited on behalf of the deductees is detailed in these certificates.
  • TDS Compliance Audits: The Income Tax Act also applies tax audits to private limited businesses. Tax auditors carefully do the audit of TDS compliance as one of their auditing priorities to guarantee proper TDS deduction, payment, and reporting.
  • Maintaining accurate records of TDS deductions, payment challans, TDS returns, and certificates is essential for compliance and can be needed during an audit.

Non-compliance with TDS provisions

The department has severe penalties for carelessness or delay in filing TDS returns.

  • Interest at a rate of 1% per month will be assessed for failure to deduct TDS.
  • Interest at a rate of 1.5% per month will be applied to the amount deducted for failure to pay TDS.
  • Section 234E penalises non-filers, and delayed filers of TDS returns up to a maximum of Rs 5000. The fine is Rs 200 per day.
  • Regarding non-compliance with TDS regulations: Should the Assessing Officer consider that the organisation or the TDS deducting authority violates any TDS regulations, he may levy a penalty of up to Rs 1 lakh.

When is the deadline for giving the government the TDS?

By the seventh of the next month, the government must receive the Tax Deducted at Source.

For example, TDS withheld in June must be reimbursed to the government by July 7th. On the other hand, the TDS that was withheld in March may be deposited through April 30. The deadline for paying TDS is 30 days after the end of the month, in which TDS is deducted from rent and property purchases.

What is a TDS certificate?

TDS certifications are contained in Forms 16, Form 16A, Form 16 B, and 16 C. The person deducting TDS must provide TDS certificates to the assessee from whose income TDS was withheld during payment. For example, when TDS is applied to interest on fixed deposit accounts, banks provide the depositor with Form 16A. The employee receives Form 16 from the employer.


TDS compliance is essential for people and organisations to handle their taxes responsibly, as required by law. Companies may contribute to the country's revenue system and show their commitment to tax transparency by carefully following TDS requirements. Contact CA Manoj Kumar to receive professional advice and help with TDS compliance. We have years of expertise and a track record of providing thorough tax solutions, so you can easily rely on us to guide you through the complexities of TDS compliance. Make an appointment for a consultation with us right now to ensure your company maintains compliance and maximises tax efficiency.

Frequently Asked Questions

What are the compliance requirements for a private limited company?

The Tax Deducted at Source (TDS) regulations is relevant to transactions. For example, suppose a private limited firm pays an employee a salary that exceeds the basic exemption level, and taxes are due. In that case, TDS must be withheld from the payment and paid to the government monthly.

What is the legal compliance of a company?

Businesses must keep accurate books of accounts, hire a qualified tax expert, and file the TDS return before the deadline to guarantee timely compliance. This guarantees the company complies with all TDS laws and helps prevent heavy penalties.

Is audit compulsory for private limited companies?

According to the Act and the Companies (Accounts) Rules, 2014, every private limited company must audit its annual accounts every financial year.

What is the limit of tax audit in Pvt Ltd?

There is a Rs. 10 crore tax audit ceiling for corporate firms. If a person conducts most of their transactions online, they are subject to a threshold of Rs. 10 crore. Then, such commercial entities are subject to an audit.