TDS Compliance: Common Mistakes to Avoid

Tax Deducted at Source (TDS) is one of the government's primary mechanisms for tax collection. As a business owner, you're responsible for deducting TDS on various payments and depositing it with the government within specified timelines.

Mistake #1: Not deducting TDS when required. Many businesses, especially smaller ones, are unaware of all the payments that attract TDS — rent exceeding ₹2.4 lakh annually, professional fees above ₹30,000, contractor payments above ₹30,000, and many more. Failure to deduct TDS makes you liable for the tax amount plus interest and penalties.

Mistake #2: Late deposit of TDS. TDS deducted must be deposited by the 7th of the following month (30th April for March deductions). Late deposits attract interest at 1.5% per month from the date of deduction to the date of actual payment.

Mistake #3: Incorrect TDS rates. Different sections prescribe different TDS rates, and these rates change periodically. Using the wrong rate can lead to short deduction, requiring you to pay the difference with interest.

Mistake #4: Not filing TDS returns on time. Quarterly TDS returns (Form 24Q, 26Q, 27Q) must be filed within the prescribed due dates. Late filing attracts a fee of ₹200 per day under Section 234E, which can accumulate to significant amounts.

Mistake #5: PAN-related issues. Not collecting PAN from deductees or quoting incorrect PAN leads to TDS at higher rates (20%) and mismatched credits in the deductee's Form 26AS.

SKS Associates provides comprehensive TDS compliance services, ensuring your business stays penalty-free. From calculating correct TDS amounts to timely filing of returns, we handle it all. Contact us to simplify your TDS compliance.