Form 26Q - TDS Return Filing for Non Salary Deductions

Form 26Q pertains to TDS as per Section 200(3) of the Income Tax Act 1961. It serves as a TDS return statement reporting deductions made on payments other than salaries. However, it includes payments made to Indian citizens only. 26Q TDS does not apply to payments made to Non-Resident Indians (NRI).

The deductor must submit the form to the government every quarter before the Form 26Q due date. Failing to do so can result in penalties.

In the context of TDS utility for Form 26Q, it is the deductor who submits it with the relevant authority. After deductors have withheld TDS, they provide the details of such deductions carried out on payments released to residents. These payments may include interest, professional fees, rent, commission, and other non-salary disbursements.

Form 26Q applies to various sections like Section 193, 194, 194A, 194B, 194BB, 194C, 194D, 194EE, 194F, 194G, 194H, 194I, and 194J.

The nature of payments covered under Form 26Q, for which a deductor is required to deduct TDS, include:

• Dividend

• Interest on Securities

• Payment of Insurance Commission

• Payment of Professional/Technical Services

• Payment to Contractors

• Rent on Property

• Brokerage or Commission

• Payment in respect of Life Insurance Policy

• Interest on other than Interest on Securities

• Winning from Horse Race

• Winning from Puzzles/Lotteries/Games

• Commission, prize, etc., on sale of lottery tickets

• Commission/Remuneration to the director of the company

Unlike Form 24Q, which contains two annexures, Form 26Q contains only one. It demands the following details:

Deductor

• Name

• Address

• Contact details

• Permanent Account Number (PAN)

Deductee

• Name

• Address

• Contact details

• PAN

Challan Details

• Serial number

• BSR Code

• TDS amount

• Surcharge amount

• Education cess amount

• Interest amount

• Total tax deposit

• Collection code

• Tax deposit rate

• Number of demand drafts or cheques

• Method of TDS deposition

The deductor must pay the TDS deducted, excluding salary deductions, on a monthly basis. The deadline for this payment falls on the 7th of the subsequent month, while in March, it extends to the 30th of April.

26Q TDS must be submitted quarterly. The prescribed Form 26Q due date is as follows:

Section 234E applies a fine of ₹200 per day to defaulters until the return is filed. The penalty is accumulated daily until it equals the total TDS amount.

Moreover, as per Section 271H, the Assessing Officer (AO) may levy a penalty ranging anywhere between ₹10,000 and ₹1,00,000.

The penalties under Section 271H are exempted if the following conditions are fulfilled:

• The TDS has been paid to the government

• All interest and late filing fees are paid

• The return is submitted before the expiration of one year from the due date

The steps to download Form 26Q from TRACES are described below.

• Visit TRACES’ official website.

• Fill out your User ID and password to log in. Deductors must enter Tax Deduction and Collection Account Number (TAN).

• From the options listed under the ‘Downloads’ menu, click on e-TCS or e-TDS.

• Click on ‘Quarterly Returns’ and ‘Regular.’

• You will arrive at a new page where the ‘Form’ section is visible.

• Choose Form 26Q and click on download.

It is essential to understand 26Q TDS if you receive or make payments apart from salary to individuals or organisations. These payments include property rent, interest on securities, insurance commission, winning from horse races, winning from games, brokerage or commission, payment for a life insurance policy, etc.

As a deductor, you must follow the instructions and file Form 26Q for an income tax return on or before the due date. Failing to meet the deadline can result in penalties. Form 26Q is available for download on the official TRACES website.

Section 194D mandates a TDS deduction on commission paid to brokers or agents for health insurance or life insurance. The individual or company will make deductions if the agent or broker payment exceeds ₹15,000 in a financial year.

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