TDS Quarterly Returns: Filing Form 26Q and Form 24Q Without Errors
TL;DR
- Form 24Q reports TDS deducted on salary payments to employees; Form 26Q reports TDS on all other domestic payments like contractor fees, professional fees, rent, and interest.
- Both forms must be filed quarterly on the TRACES portal with PAN-wise payment and TDS details.
- Due dates are 31st July (Q1), 31st October (Q2), 31st January (Q3), and 31st May (Q4 - extended for annexure II in Form 24Q).
- Late filing attracts Rs. 200 per day under Section 234E and additional penalties under Section 271H if delayed beyond a year.
- Errors in PAN or challan details cause TDS credit denial to deductees and trigger correction statements.
What this means in plain terms
When your business deducts TDS - on salary, vendor invoices, rent, commission, or contractor payments - the deposit alone isn't enough. The government wants to know exactly whom you paid, how much, and how much TDS was deducted against each PAN. This information flows in through the quarterly TDS returns.
Form 24Q is for salary TDS under Section 192. Form 26Q is for everything else - 194C, 194J, 194H, 194A, 194-I, and most other domestic TDS sections. NRI-related TDS uses Form 27Q. These returns build the Form 26AS that your employees and vendors view, which is how they claim TDS credit in their ITR.
Differences between Form 24Q and Form 26Q
Coverage
Form 24Q exclusively reports salary TDS under Section 192. It captures employee PAN, gross salary, exempt allowances, deductions, taxable income, and TDS deducted month-wise. Form 26Q captures non-salary domestic TDS - vendor and service-provider payments.
Annexures
Form 24Q has two annexures. Annexure I covers all four quarters and lists deductee-wise TDS details. Annexure II is filed only with the Q4 return and provides the consolidated salary statement for each employee including all chapter VI-A deductions claimed.
Frequency
Both forms are filed quarterly. Form 26Q is straightforward each quarter with deductee-wise details. Form 24Q gets more elaborate in Q4 because of the year-end Annexure II compilation.
Due dates and grace period
Standard quarterly deadlines
Q1 (April-June) returns are due by 31st July. Q2 (July-September) by 31st October. Q3 (October-December) by 31st January. Q4 (January-March) by 31st May of the next financial year.
Penalty under Section 234E
Late filing attracts a fee of Rs. 200 per day until the return is filed, capped at the amount of TDS deducted in that return. This fee must be paid before filing and cannot be reduced by appeal.
Section 271H penalty
If the return is delayed beyond one year from the due date, or contains incorrect PAN or challan information, an additional penalty of Rs. 10,000 to Rs. 1,00,000 may apply under Section 271H.
Filing process on TRACES
Preparing the return
Use the latest Return Preparation Utility (RPU) and File Validation Utility (FVU) available on the TIN-NSDL portal. Enter deductor TAN, deductee PAN, payment amount, TDS deducted, and the challan identifier (CIN) for each payment.
Validation and submission
Run the FVU - it produces a .fvu file and an error report. Fix all errors before generating the final file. Upload to the TRACES portal using your digital signature certificate (DSC) or electronic verification code (EVC).
Form 16A generation
Once the return is processed, TRACES allows download of Form 16A certificates for each deductee. Issue Form 16A within 15 days of the return due date. Salary Form 16 is generated after Q4 filing with Annexure II.
A real example
Suresh, 47, runs an IT services firm in Chennai with 30 employees and an annual turnover of Rs. 9 crore. For Q1 of FY 2026-27 (April-June 2026), the firm deducts:
- Salary TDS (192) on 30 employees: Rs. 6,80,000 total
- Professional fees TDS (194J) to 4 consultants: Rs. 24,000
- Contractor TDS (194C) to 3 vendors: Rs. 18,000
- Office rent TDS (194-I) to landlord: Rs. 30,000
Step 1: Suresh's accountant downloads the latest RPU and prepares Form 24Q with employee-wise salary TDS and Form 26Q with consultant, contractor, and landlord TDS.
Step 2: All challan CINs from monthly deposits are mapped to the respective deductee entries.
Step 3: FVU validation flags one missing PAN. Suresh collects it and updates the file.
Step 4: Both forms are uploaded to TRACES with DSC by 31st July 2026.
Step 5: After 7-10 days of TRACES processing, Form 16A certificates for the consultants, contractors, and landlord are generated and emailed.
Step 6: Salary Form 16 is generated after Q4 filing (by 31st May 2027), incorporating Annexure II with full-year salary data and deductions.
Without these returns, the Rs. 7,52,000 of total TDS would never appear in any deductee's Form 26AS - blocking their tax credits and creating chaos.
What to do this week
- Confirm your deductor TAN and DSC are active on TRACES and renewed if expiring.
- Reconcile your monthly TDS deposits against book entries to ensure every deduction has a matching challan.
- Download the latest RPU/FVU from TIN-NSDL to avoid using a deprecated version.
- Calendar all four quarterly due dates and set a 7-day buffer for FVU error correction.
- Run the 6-step assessment at https://myfinancial.in to see your old-vs-new regime delta, unused deductions, and insurance gap in under 10 minutes.
FAQ
What happens if I report a wrong PAN in the return?
The TDS credit will not flow to the correct deductee. They will not see it in Form 26AS, may receive a defective return notice, and you will need to file a correction statement on TRACES to fix it.
Can I file Form 24Q without filing Form 26Q in the same quarter?
Yes. Each form is independent. If you only deducted salary TDS in a quarter and no other TDS, you file only Form 24Q.
Is a NIL return mandatory?
If you have a valid TAN but no TDS to report in a quarter, you can file a NIL declaration via the TRACES portal. This avoids the system flagging you as a non-filer.
How do I correct an already-filed return?
Submit a correction statement on TRACES. You can correct deductee PAN, payment amount, TDS amount, or challan details. Conso file is generated from TRACES for editing offline before re-uploading.
What is the difference between Form 26Q and Form 27Q?
Form 26Q is for TDS on payments to residents under sections like 194C, 194J, 194H, etc. Form 27Q is for TDS on payments to non-residents under Section 195.
Can I delay filing if I have a low TDS amount?
No. The Rs. 200 per day late fee under Section 234E applies regardless of TDS amount. Even a NIL return filed late attracts the fee. File on time even if you missed making the deposit.
What is the Q4 Annexure II in Form 24Q?
Annexure II is a year-end consolidated statement showing each employee's full salary breakdown, deductions under Chapter VI-A, regime chosen, and total TDS for the year. It is used to generate Form 16 Part B.
Sources
- TRACES portal (TDS Reconciliation Analysis and Correction Enabling System): https://www.tdscpc.gov.in/
- Income Tax Department, TDS Forms: https://incometaxindia.gov.in/
- NSDL RPU/FVU downloads: https://www.tin-nsdl.com/
- Finance Ministry on TDS compliance: https://finmin.nic.in/
This is general information, not personalised advice. For your situation, consult a Certified Financial Planner.
