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TDS is not a tax on your business. You are collecting somebody else's tax and holding it briefly for the government. Treat that money as never having been yours and most TDS problems disappear.
Common payments that attract TDS
- Salaries, at the average rate applicable to each employee
- Contractor and sub-contractor payments above the prescribed limits
- Professional and technical fees
- Rent above the annual threshold
- Commission and brokerage
The three deadlines that matter
Deduct at the time of credit or payment, whichever is earlier — not when the invoice is settled. Deposit by the seventh of the following month. File the quarterly return by its due date, because the deductee cannot claim credit until you do.
What non-compliance costs
Interest runs from the date the tax was deductible, not the date you noticed. Late filing carries a daily fee, and a portion of the expense itself can be disallowed when computing income — so a modest deduction failure can cost several times its own value.
If you have missed deductions in a past quarter, a corrective filing now limits the damage. Waiting for a notice does not.
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