TDS for Small Business Owners — The Complete Deduction, Deposit & Filing Guide for Delhi SMEs

The Most Expensive TDS Mistake: The 30% Expense Disallowance
Before diving into rates and deadlines, every small business owner in Delhi must understand the single most financially devastating consequence of TDS non-compliance — one that is separate from interest and penalties, and far more expensive than both combined.
❌  Section 40(a)(ia): The 30% Business Expense Disallowance Rule
What it says: If you make a payment to a resident on which TDS was required but you did NOT deduct it (or deducted it but did not deposit by the ITR filing due date), 30% of that payment amount is disallowed as a business expense while computing your taxable income.
Example — Contractor payments: A Delhi SME pays ₹5,00,000 to sub-contractors in FY 2025-26 without deducting TDS under Section 194C. 30% of ₹5,00,000 = ₹1,50,000 is disallowed. At 25% corporate tax rate: additional tax = ₹37,500. Plus interest at 1% per month from the date TDS should have been deducted.
Example — Professional fees: A trading company pays ₹2,00,000 in legal fees to a lawyer without TDS under Section 194J. Disallowance = ₹60,000. Extra tax = ₹15,000. This is on top of TDS interest.
Critical: The 30% disallowance cannot be reversed. Even if TDS is eventually deducted and deposited late, the disallowance is permanent for that financial year. It is avoided ONLY if TDS is deposited before the due date of filing the ITR for that year.
“The 30% disallowance is the TDS penalty most small business owners in Delhi have never heard of — until their CA tells them about it during assessment. A contractor-heavy business that missed TDS on ₹20 lakh of sub-contractor payments faces ₹6 lakh in disallowed expenses, resulting in an extra ₹1.5 lakh in tax at the 25% rate. That is far more damaging than the interest on the TDS itself. This is why we tell every new SME client: TDS on contractors and professionals is not optional. It is survival.”
— CA Bipin Kumar Jha, Partner, B M C & Associates
Does Your Business Have to Deduct TDS? The Definitive Answer for Every Delhi Business Type
One of the most common misconceptions among Delhi SMEs is that TDS only applies to large companies. This is wrong. TDS obligations apply to sole proprietors, partnership firms, LLPs, and companies based not on size but on specific payment thresholds and business turnover. Here is the definitive answer for every type of Delhi business:
 
Business Type
TAN Required?
Must Deduct TDS on Salary?
Must Deduct on Contractors (194C)?
Must Deduct on Professional Fees (194J)?
Must Deduct on Rent (194-I)?
Must Deduct 194-IB, 194M?
Sole proprietor — turnover <₹1 crore (business) or <₹50L (profession)
Yes (for salary)
YES — always
NO (exempted)
NO (exempted)
NO (exempted)
YES — 194-IB if monthly rent >₹50K; 194M if contractor/prof payments >₹50L/yr
Sole proprietor — turnover >₹1 crore
Yes
YES
YES (2%)
YES (10%/2%)
YES (10% or 2%)
Yes (but also under 194C/194J now)
Partnership firm / LLP
Yes
YES
YES (2%)
YES (10%/2%)
YES (10% or 2%)
N/A — covered under main sections
NEW: Partnership firm paying partner (Section 194T)
Yes
YES (if partner is treated as employee)
YES (2%)
YES (10%/2%)
YES
YES — 194T: 10% on partner remuneration/interest/commission >₹20,000/yr — NEW from April 2025
Private Limited Company / OPC
Yes
YES
YES (2%)
YES (10%/2%)
YES (10% or 2%)
N/A — covered under main sections
Individual buying property >₹50 lakh
No TAN — Form 26QB
NO
NO
NO
NO
YES — 194-IA (1%) on property purchase — mandatory via Form 26QB
Individual/HUF paying monthly rent >₹50,000
No TAN — Form 26QC
NO
NO
NO
NO
YES — 194-IB (5%) — annual or one-time Form 26QC filing
E-commerce seller receiving payment via platform
No — platform deducts
NO
NO
NO
NO
You receive payments NET of 194-O TDS (0.1%) deducted by platform — claim via ITR

 
The critical turnover test for individual/HUF exemption (Sections 194C, 194J, 194H, 194-I): An individual or HUF is NOT required to deduct TDS on contractor payments (194C), professional fees (194J), commission/brokerage (194H), or rent (194-I) if their business turnover in the preceding financial year did not exceed ₹1 crore (business) or ₹50 lakh (profession). However, this exemption does NOT apply to 194-IB (rent >₹50,000/month) or 194M (contractor/professional payments >₹50 lakh/year) — these always apply to individuals/HUFs regardless of turnover.
“The turnover threshold test confuses small business owners every year. A sole proprietor earning ₹80 lakh in FY 2024-25 thinks they are exempt from all TDS. But if they pay rent of ₹60,000 per month to their landlord, Section 194-IB applies regardless of their turnover. If they pay a lawyer ₹3 lakh, Section 194M triggers if cumulative contractor/professional payments exceed ₹50 lakh. The exemptions are specific to sections, not blanket. Getting this wrong is the most expensive mistake a small business makes.”
— CA Saroj Jha, Partner, B M C & Associates
5 Critical TDS Changes in Budget 2025 Every Delhi SME Must Act On Now
Change 1: Section 194J Threshold Raised from ₹30,000 to ₹50,000 — Less TDS on Professional Fees
The threshold for TDS on professional and technical services under Section 194J has been raised from ₹30,000 to ₹50,000 per year per payee. This means a Delhi business paying ₹45,000 to a freelance consultant or IT professional in FY 2025-26 no longer needs to deduct TDS on that payment. Key implications:
•        Reduced administrative burden for SMEs with multiple small professional vendors
•        BUT: If the same consultant is paid ₹55,000 in the year, TDS now applies on the ENTIRE ₹55,000 (not just the excess above ₹50,000)
•        Technical services (call centre fees, software maintenance) remain at 2%; professional services at 10% — the rate split remains unchanged
•        Directors' professional fees: remain taxable under 194J regardless of threshold — the ₹50,000 exemption does NOT apply to director fees
 
Change 2: Section 194-I Rent Threshold Raised to ₹6 Lakh per Year (₹50,000/Month) — Big Relief for Tenants
The annual threshold for TDS on rent (land, building, furniture) under Section 194-I(b) has been raised dramatically from ₹2,40,000 (₹20,000/month) to ₹6,00,000 (₹50,000/month) — a 150% increase. This is the single biggest threshold relief in the Budget 2025 TDS changes. What this means:
•        A business paying ₹45,000/month (₹5,40,000/year) in rent now has ZERO TDS obligation under 194-I(b)
•        TDS at 10% now only applies when monthly rent exceeds ₹50,000 (₹6 lakh annual)
•        Plant & machinery rent (Section 194-I(a)) threshold remains at ₹2,40,000 per year — unchanged
•        The separate 194-IB for individuals/HUFs paying rent remains at ₹50,000/month — now aligned with the 194-I(b) threshold
 
Change 3: Section 194H Commission/Brokerage Rate Cut from 5% to 2% — Lower Withholding for Distributors
From October 1, 2024 (effective for FY 2025-26), the TDS rate on commission and brokerage under Section 194H was reduced from 5% to 2%. The threshold was also increased from ₹15,000 to ₹20,000. This is particularly significant for:
•        Businesses with distributor networks paying dealer commissions — TDS cost reduced by 60%
•        Insurance agents, stockbrokers, and marketing agents receiving commission payments
•        E-commerce platforms and marketplace operators paying seller commissions
•        Note: Director remuneration paid as commission still attracts 194J at 10% — NOT 194H's 2% rate
 
Change 4: Section 194T — NEW TDS on Partner Payments — Partnership Firms and LLPs Must Act
The most significant new TDS section introduced in FY 2025-26 is Section 194T, effective April 1, 2025. Every partnership firm and LLP in Delhi NCR that pays remuneration, salary, commission, bonus, or interest to its partners must now deduct TDS at 10% if aggregate payments to any partner exceed ₹20,000 per year.
🔵  Section 194T — What Every Partnership Firm and LLP in Delhi Must Know:
•        Applies to: ALL payments to partners — salary, remuneration, commission, bonus, interest on capital
•        Threshold: ₹20,000 aggregate per partner per year — most firms will exceed this immediately
•        Rate: 10% TDS on all partner payments above the threshold
•        Without PAN: 20% TDS — ensure all partners have valid PAN linked to the firm's books
•        Deposit: By 7th of the following month (or 30th April for March payments)
•        Return: Include in quarterly Form 26Q — same as other non-salary TDS
•        Certificate: Issue Form 16A to each partner within 15 days of quarterly return filing
•        CRITICAL: Many LLPs and partnership firms are currently non-compliant on this. The section became effective April 1, 2025 — all payments from April 2025 onwards are covered. Backdated correction now before notice arrives.
 
Change 5: Section 206AB Extended — Higher TDS for Non-Filers of ITR
Section 206AB, which mandates higher TDS rates on payments to individuals who have not filed income tax returns for two preceding financial years, continues in FY 2025-26 with Section 206AB removed from the new Income Tax Act 2025 (it is being replaced by a more streamlined mechanism). For FY 2025-26 under the 1961 Act, 206AB still applies: if you pay anyone who has not filed ITR for both FY 2022-23 and FY 2023-24 AND whose TDS exceeded ₹50,000 in each of those years, deduct TDS at the higher of 2× applicable rate or 5%. Use the Income Tax portal’s Compliance Check utility to verify before making large payments.
Complete TDS Rate Reference Chart for FY 2025–26: Every Section at a Glance
The following comprehensive table covers every TDS section relevant to Delhi SMEs with current thresholds, rates, and applicability as of April 1, 2025:
 
Section
Payment Type
Threshold (FY 2025-26)
TDS Rate
Without PAN
Who Must Deduct?
192
Salary to employees
Taxable income above basic exemption
As per slab rates
20% flat
ALL employers — mandatory from first salary
192A
Premature PF withdrawal
₹50,000 per withdrawal
10%
20%
Employee's PF Trust / EPFO
193
Interest on securities
₹10,000 per year
10%
20%
Business paying interest on debentures / bonds
194
Dividend from Indian companies
₹5,000 per year
10%
20%
Company paying dividend
194A
Interest (banks, FDs, NBFCs)
₹50,000/yr (senior citizens ₹1L/yr) — raised from ₹40,000 in Budget 2025
10%
20%
Banks, NBFCs, cooperative societies
194B
Lottery / game show winnings
₹10,000 per prize
30%
30%
Organizer / paying entity
194C
Payment to contractors & sub-contractors
₹30,000 per contract OR ₹1,00,000 aggregate per year
1% (individual/HUF) / 2% (others)
20%
All businesses — EXCEPT individual/HUF below ₹1Cr turnover
194D
Insurance commission
₹15,000 per year
5%
20%
Insurance company
194G
Commission on lottery tickets
₹15,000 per year
5%
20%
State government / lottery operator
194H
Brokerage / commission
₹20,000 per year (raised from ₹15,000 Oct 2024)
2% (reduced from 5% Oct 2024)
20%
All businesses paying commission
194-I(a)
Rent — plant, machinery, equipment
₹2,40,000 per year
2%
20%
All businesses — EXCEPT individual/HUF below threshold
194-I(b)
Rent — land, building, furniture
₹6,00,000 per year (₹50,000/month — raised from ₹2,40,000 in Budget 2025)
10%
20%
All businesses / individuals if annual rent >₹6L
194-IB
Rent paid by individual/HUF (not covered by 194-I)
₹50,000 per month
5%
20%
Individual/HUF paying monthly rent above ₹50,000 — NO TAN required; use Form 26QC
194-IC
Payment under JDA to landowner
No threshold
10%
20%
Developer paying to landowner in joint development
194J
Professional / technical services fees
₹50,000 per year (raised from ₹30,000 Budget 2025)
10% (professional) / 2% (technical services, call centre, royalty for software)
20%
All businesses — EXCEPT individual/HUF below ₹1Cr/₹50L turnover
194K
Income from mutual fund units
₹5,000 per year
10%
20%
Mutual fund / AMC paying dividend
194LA
Compensation for compulsory land acquisition
₹2,50,000
10%
20%
Government / acquiring authority
194M
Payment by individual/HUF to contractor/professional (if above threshold — not under 194C/194J)
₹50,00,000 per year
5%
20%
Individual/HUF NOT liable to tax audit, paying >₹50L to contractor/professional — NO TAN; use Form 26QD
194N
Cash withdrawal from bank
₹1 crore per year (₹20L if ITR not filed)
2% (or 5% if ITR not filed)
N/A
Banks / post offices / cooperative banks
194O
E-commerce sales proceeds (platform to seller)
N/A — applies to all sellers
0.1% (reduced from 1% Oct 2024)
5%
E-commerce Operator (Amazon, Flipkart, Meesho, etc.)
194Q
Payment for purchase of goods
₹50 lakh per year per buyer
0.1%
5%
Buyer with turnover >₹10 crore buying goods from seller
194R
Benefit/perquisite to a business party (gifting)
₹20,000 per year
10%
20%
Business giving gifts, sponsored trips, freebies to dealers/agents
194T
Payment to partner of firm/LLP (NEW — April 2025)
₹20,000 per year
10%
20%
Partnership firms and LLPs paying remuneration, salary, bonus, commission, or interest to partners
194-IA
Purchase of immovable property
₹50 lakh (full property value)
1%
1%
Property buyer — NO TAN; use Form 26QB online
195
Payment to non-residents (fees, royalties, interest)
No threshold
Varies by nature: 10-40% (DTAA can reduce)
40%+
All businesses paying abroad — needs Form 15CA/15CB
206AB
Payment to non-filer of ITR (two preceding years)
Same threshold as applicable section
Higher of: 2× specified rate OR 5%
N/A
All deductors — mandatory compliance check before payment

 
How to Deposit TDS: Step-by-Step Guide to Challan 280 / ITNS 281 Online
TDS must be deposited using Challan ITNS 281 — a specific challan for TDS/TCS payments, different from Challan 280 (used for income tax and advance tax). Here is the exact process:
1.     Step 1: Visit incometax.gov.in → 'e-Pay Tax' or go to tin.tin.nsdl.com for non-login payment
2.     Step 2: Select 'CHALLAN NO./ITNS 281' — NOT ITNS 280
3.     Step 3: Enter your TAN (Tax Deduction Account Number) — NOT PAN. TAN is a 10-digit alphanumeric number. If you don't have a TAN, apply via Form 49B on NSDL portal first.
4.     Step 4: Select Assessment Year — for TDS on FY 2025-26 payments, AY is 2026-27
5.     Step 5: Select Payment Type: (200) TDS / TCS payable by taxpayer OR (400) TDS/TCS regular assessment demand. Always use (200) for voluntary deposits.
6.     Step 6: Select the Nature of Payment (Section code) — e.g., 194C for contractors, 194J for professional fees, 192 for salary. Use the correct section code; wrong codes cause Form 26AS mismatches for the payee.
7.     Step 7: Enter the TDS amount broken down by Surcharge, Education Cess, and Interest (if any late deposit penalty). Total should equal TDS deducted + any interest for delayed payment.
8.     Step 8: Choose payment mode: Net Banking (recommended for instant confirmation), RTGS/NEFT, or physical bank counter
9.     Step 9: Complete payment. Download and save the BSR Code + Challan Serial Number — required for TDS return filing
10. Step 10: Verify payment in TRACES portal (tdscpc.gov.in) after 3-5 days — BSR code must appear in your TAN dashboard before filing the return
 
❌  Common TDS Deposit Mistakes That Create Payee Mismatches:
•        Using ITNS 280 instead of ITNS 281 — different challan, payment goes to wrong head
•        Entering wrong section code (e.g., entering 194C when it should be 194J) — payee's Form 26AS shows wrong section and they receive notices
•        Using PAN instead of TAN — payment bounces or doesn't get credited
•        Depositing for wrong Assessment Year — mismatch between challan and return; requires correction
•        Not separating interest from TDS amount — challan should show TDS amount + interest separately for clear reconciliation
•        Missing the March deadline (special extended to April 30) — most critical single deadline of the year
 
How to File TDS Returns: Forms 24Q, 26Q, 27Q — Quarterly Filing Guide
Which Form to Use?
•        →  Form 24Q:  TDS on salaries paid to employees (Section 192)
•        →  Form 26Q:  TDS on all other payments to RESIDENTS (194C, 194J, 194H, 194-I, 194A, 194T, etc.)
•        →  Form 27Q:  TDS on payments to NON-RESIDENTS (Section 195, 194LB, etc.)
•        →  Form 26QB:  TDS on purchase of immovable property (194-IA) — filed online without TAN
•        →  Form 26QC:  TDS on rent by individual/HUF (194-IB) — filed online without TAN
•        →  Form 26QD:  TDS by individual/HUF on contractor/professional payments (194M) — filed without TAN
 
Quarterly Filing Process — Step by Step
11. Consolidate all TDS payments for the quarter:  Gather all ITNS 281 challans with BSR codes and Challan Serial Numbers for the quarter
12. Download TDS Return Preparation Utility (RPU):  From TRACES portal (tdscpc.gov.in) → Download → RPU. Use the latest version — outdated RPU versions cause return rejection
13. Enter deductee details:  For each payment: deductee name, PAN, payment date, gross amount paid, TDS rate, TDS deducted, challan BSR code
14. Validate the return:  Run the File Validation Utility (FVU) bundled with RPU — fix all errors before generating the final .fvu file
15. Upload on TRACES/TIN-FC:  Upload the .fvu file on TRACES portal or submit at a TIN Facilitation Centre (authorized NSDL agency)
16. Verify acknowledgment:  Download Provisional Receipt / Token Number — keep for your records
17. Issue Form 16A to deductees:  Within 15 days of the due date of filing the quarterly TDS return — generated only from TRACES portal (not manually typed)
 
“We see two types of TDS compliance failures. The first is not knowing TDS applies at all — missing contractors, missing Section 194T for partners, missing 194-IB for rent. The second is knowing but doing it wrong — wrong section codes, wrong assessment year, Form 16A issued manually instead of from TRACES. Both attract the same consequences. The fix is the same too: get a CA to set up your TDS framework once, automate the reminders, and file on time every quarter. It takes far less effort than responding to an Income Tax Department notice six months later.”
— CA Manish Mishra, Partner, B M C & Associates
The Complete TDS Penalty and Interest Framework: What Non-Compliance Costs
The following table shows the exact financial consequences of every type of TDS default for a Delhi SME, with real rupee calculations:
 
Default
Section
Rate
Example (₹1L TDS)
Additional Consequence
TDS not deducted at all
201(1A)
1% per month from date it SHOULD have been deducted to date of actual deduction
2 months delay: ₹2,000 interest
30% of expense DISALLOWED in P&L — costs more than the interest
TDS deducted but deposited late
201(1A)
1.5% per month from date of deduction to date of actual deposit
2 months delay: ₹3,000 interest
Potential 'assessee in default' status; prosecution if wilful
TDS Return filed late
234E + 271H
₹200/day late fee + ₹10,000–₹1,00,000 penalty
30 days late: ₹6,000 late fee + potential penalty
Court can demand up to ₹1L penalty under Section 271H
PAN not obtained from payee — TDS at 20%
206AA
Double the applicable rate or 20%, whichever is higher
₹1L payment: deduct ₹20,000 instead of ₹10,000 (100% more)
Payee claims excess in ITR; you face reconciliation issues
No TDS on non-ITR filer (Section 206AB)
206AB
Higher of: 2× specified rate or 5%
₹1L professional fee: deduct ₹10,000 instead of ₹5,000 without check
If audited and found non-compliant: interest + penalty
Form 16 / 16A not issued on time
272A(2)(g)
₹100 per day per certificate
10 employees × 30 days late = ₹30,000
Employee/payee cannot reconcile ITR; disputes with deductees
Wrong section cited in TDS return
Procedural error
May require correction statement (rectification)
Processing delay; mismatch in payee's Form 26AS
Deductee receives notice; blame often lands on deductor
30% expense disallowance (non-deduction)
40(a)(ia)
30% of payment disallowed in business income computation
₹5L contractor payment, no TDS: ₹1.5L disallowed → ₹37,500 extra tax at 25%
Cannot be reversed retroactively; permanent income tax loss

 
Complete TDS Compliance Calendar for Delhi SMEs: FY 2025–26
 
Due Date
Obligation
Form / Challan
Penalty if Missed
7th of every month (except March)
Deposit TDS deducted in previous month to government
ITNS 281 Challan — Income Tax portal
1.5% per month interest from deduction date to payment date (Section 201)
30th April
Deposit TDS for March (special: last month of FY has extended deadline)
ITNS 281 Challan
1.5% per month interest if paid after April 30
31st May
TDS Return for Q4 (January–March)
Form 26Q (non-salary domestic) / Form 27Q (non-resident)
₹200/day late fee + ₹10,000–₹1,00,000 penalty (Section 271H)
15th June
TDS Return for Q1 (April–June) — wait for next quarter
Annual quarterly cycle
N/A — Q1 return not yet due
15th July
TDS Return for Q1 (April–June)
Form 26Q / 27Q
₹200/day late fee
15th August
Issue Form 16A (TDS Certificate) for Q1 deductions to payees
Form 16A — generated via TRACES portal
Penalty up to ₹100/day for non-issuance
15th October
TDS Return for Q2 (July–September)
Form 26Q / 27Q
₹200/day late fee
15th November
Issue Form 16A for Q2 deductions
Form 16A — TRACES
Penalty up to ₹100/day
15th January
TDS Return for Q3 (October–December)
Form 26Q / 27Q
₹200/day late fee
15th February
Issue Form 16A for Q3 deductions
Form 16A — TRACES
Penalty up to ₹100/day
31st May (Annual)
Issue Form 16 (salary TDS certificate) to all employees
Form 16 Part A + B — TRACES
₹100/day per employee for non-issuance (Section 272A)
Before each payment abroad
File Form 15CA + obtain Form 15CB from CA
Income Tax portal + CA certification
₹1 lakh per instance for non-compliance
Within 30 days of property purchase (≥₹50L)
File Form 26QB — TDS on property
Form 26QB online — no TAN needed
₹200/day late fee + 1.5%/month interest + potential buyer made 'assessee in default'
Monthly (if paying monthly rent >₹50,000)
File Form 26QC — TDS by individual/HUF on rent
Form 26QC online — no TAN needed; TDS for entire year can be filed once
1.5%/month interest + ₹200/day late fee
Quarterly / as applicable
Apply for lower deduction certificate if payee wants reduced TDS
Form 13 filed on Income Tax portal by payee
Not a business obligation — payee applies
Before payment to non-ITR filer
Check Section 206AB compliance via Income Tax Compliance Check utility
IT portal Compliance Check portal
Higher TDS at 2× rate or 5% if check not done and default later identified

 
TDS on Foreign Payments (Section 195): What Delhi Businesses Must Know
Any Delhi business that makes payments to non-residents — including software subscriptions to US companies, consultancy fees to foreign advisors, royalties, rent for foreign-owned assets, or interest on ECBs — must comply with TDS obligations under Section 195. This is one of the most widely missed TDS obligations among Delhi SMEs.
•        Section 195 applies to ALL payments to non-residents that are chargeable to tax in India
•        TDS rates vary from 10% to 40% depending on the nature of payment and whether a DTAA treaty reduces the rate
•        Form 15CA (online declaration by payer) and Form 15CB (CA certificate) must be filed BEFORE remittance for most foreign payments
•        DTAA benefits: India has treaties with 95+ countries. Royalty paid to a US company: domestic rate 15-20%; India-US DTAA rate: 10-15%. Annual saving on ₹5 crore royalty = ₹25-50 lakh
•        Section 206AA: If non-resident does not have a PAN, TDS at higher of applicable rate or 20% — get PAN or DTAA documentation before making foreign payments
•        Penalty for missing 15CA/15CB: ₹1 lakh per remittance + bank will block the transfer without documentation
 
How B M C & Associates Manages TDS for Delhi SMEs
TDS Setup & Compliance Structuring
•        Complete TDS applicability assessment — identifying all payment types in your business that trigger TDS obligation
•        TAN application and registration for new businesses
•        Vendor master setup — classifying all vendors by TDS section, rate, and threshold
•        Section 194T compliance setup for partnership firms and LLPs — partner payment tracking and TDS deduction system
•        Accounting software TDS configuration (Tally Prime, Zoho Books, QuickBooks) — auto TDS calculation on vendor bills
 
Monthly TDS Execution
•        Monthly TDS computation — calculating deductible amounts across all payment categories
•        ITNS 281 challan preparation and online deposit by the 7th of each month
•        Section 195 / Form 15CA-15CB certification for all foreign payments before remittance
•        Monthly TDS ledger reconciliation — matching deductions to vendor payments and challan receipts
•        Section 206AB compliance check before all significant payments to verify ITR filing status of payees
 
Quarterly TDS Return Filing
•        Form 26Q (domestic non-salary), Form 24Q (salary), and Form 27Q (non-resident) quarterly filing
•        Return preparation using RPU + FVU validation — zero error filing
•        TRACES portal submission and acknowledgment archival
•        Form 16A generation from TRACES and distribution to all deductees within 15 days of return due date
•        Form 16 (Part A from TRACES + Part B) for all employees by May 31 each year
 
TDS Notice Management & Correction
•        Response to TRACES notices for short deduction, late deduction, or non-filing
•        Correction statements (revised returns) for wrong section codes, PAN errors, or challan mismatches
•        Income Tax Department notice response for 40(a)(ia) disallowance assessments
•        Demand reconciliation — matching outstanding TDS demands against challans already paid
 
“TDS compliance is not glamorous work. It does not make headlines. But it is the single biggest source of Income Tax Department notices for Delhi SMEs. We have seen healthy businesses receive demands of ₹20–30 lakh in disallowed expenses and TDS interest purely because nobody told them they needed to deduct TDS on their contractor payments. Our approach is simple: set up the framework correctly on day one, automate every step that can be automated, and file on time every quarter. In 14 years, we have never had a TDS default notice for a client who was on BMC’s managed TDS programme.”
— CA Bipin Kumar Jha, Partner, B M C & Associates
Quick Q&A: TDS Questions Delhi Business Owners Ask Every Month
Q: Do I need a TAN to pay TDS?
Yes, for most TDS payments. Apply for TAN via Form 49B on the NSDL portal — it takes 7-10 days. Exceptions: Section 194-IA (property purchase), 194-IB (individual paying rent), and 194M (individual/HUF contractor payments) allow filing via Forms 26QB, 26QC, and 26QD respectively without a TAN.
Q: My vendor says they are exempt and gave me a certificate. Do I still deduct TDS?
If the vendor has a valid lower deduction / nil deduction certificate under Section 197 (Form 13, issued by the Income Tax Department), you must honour it and deduct at the lower rate specified. If it is just a letter from the vendor claiming exemption without a government-issued certificate, you are NOT protected — deduct TDS at the applicable rate.
Q: I paid a vendor in cash. Does TDS still apply?
Yes. TDS applies on the nature of payment, not the mode. Cash payments to contractors, professionals, or landlords are still subject to TDS if thresholds are crossed. Cash payments above ₹10,000 to professionals also attract Section 40A(3) restrictions on expense deductibility. Avoid cash payments wherever possible.
Q: What if I deducted TDS but forgot to deposit it before March 31?
Deposit it immediately with interest at 1.5% per month from the date of deduction to the date of deposit. For March payments, the special extended deadline is April 30 (not the 7th). If you deposit by April 30, no interest applies on March TDS. After April 30, interest accrues daily.
Q: My partnership firm pays my partners their monthly salary. Do I now need to deduct TDS?
Yes — from April 1, 2025, Section 194T mandates 10% TDS on all partner payments (salary, remuneration, commission, interest, bonus) if aggregate exceeds ₹20,000 per year. This is a new section and most partnership firms in Delhi are not yet compliant. Apply for TAN if you don’t have one, and start deducting from the next payment cycle. File a correction for April-June payments in your Q1 return if you missed the deduction.
Q: I receive payments with TDS already deducted. How do I claim it back?
Check your Form 26AS and AIS (Annual Information Statement) on the Income Tax portal — all TDS deducted on your PAN will appear there. Claim the entire TDS credit in your ITR under ‘Schedule TDS’ or ‘Schedule TCS’. If TDS exceeds your tax liability for the year, the excess becomes a refund claimed in the ITR. Refunds are typically processed in 3–6 months with 6% simple interest if the refund exceeds 10% of total tax.
 
 
About B M C & Associates
B M C & Associates is a full-service Chartered Accountant firm headquartered in Gurugram, serving small and medium businesses, startups, freelancers, and large enterprises across Delhi, Noida, Dwarka, Gurugram, and Uttam Nagar. With 14+ years of experience and a 90%+ client retention rate, the firm’s TDS practice covers applicability assessment, TAN registration, monthly deduction and deposit management, quarterly return filing, Form 16/16A generation, TRACES reconciliation, Section 195 foreign payment compliance, and notice management. Led by CA Bipin Kumar Jha, CA Manish Mishra, and CA Saroj Jha, BMC manages TDS compliance for hundreds of Delhi NCR businesses with zero default record for managed-service clients.
 
📞  Free TDS Compliance Check for Your Business — Book a 30-Minute Session
Not sure if your business is meeting all its TDS obligations — especially the new Section 194T for partner payments? Book a free 30-minute TDS compliance review with BMC’s specialists. We will review your payment flows, identify any TDS obligations you may have missed, and provide a clear action plan to get fully compliant before the next quarterly return deadline.
Call/WhatsApp: +91-991-084-9998  |  Email: info@bmcassociates.in  |  Visit: www.bmcassociates.in
 
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B M C & Associates
Email: info@bmcassociates.in
Phone: +91-991-084-9998  |  +91-974-887-3205
Website: www.bmcassociates.in
Office: 4th Floor, Blue 1 Square, Udyog Vihar, Sector 18, Gurugram, Haryana — 122015
Also serving: Delhi  |  Noida  |  Gurugram  |  Dwarka  |  Uttam Nagar  |  Pan-India (Online)