TDS Compliance & Notice Prevention
A Comprehensive Guide to Avoiding TRACES & Income Tax Analytics Flags
Common TDS Mistakes That Trigger Notices
High Likelihood
Wrong Section Applied
Deducting under 194C instead of 194J? This leads to short-deduction demands under Section 201.
High Likelihood
Threshold Oversights
Failing to track aggregate payments during the FY. Even small payments are liable once the limit crosses.
High Likelihood
No TDS on Year-End Provisions
Liability arises at the time of credit or payment—whichever is earlier. Provisons must have TDS.
Moderate
Section 206AB Non-Compliance
Ignoring higher TDS rates for non-filers of income tax returns.
TDS Compliance Checklist (FY 2025–26)
- ✅ PAN/TAN Verification: Ensure valid registrations before any transaction.
- ✅ Residential Status: Differentiate between Resident and Non-Resident (Section 195) requirements.
- ✅ Timing: Deduct TDS at the earlier of Payment or Credit.
- ✅ 206AA Check: Deduct 20% if PAN is not furnished.
Quarterly Return Filing Deadlines
| Quarter | Period | Due Date |
|---|---|---|
| Q1 | April - June | 31 July |
| Q2 | July - September | 31 October |
| Q3 | October - December | 31 January |
| Q4 | January - March | 31 May |
Interest & Penalties
• Non-Deduction: 1% per month
• Delay in Deposit: 1.5% per month
• Late Filing (Sec 234E): ₹200 per day
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