Understanding TDS Compliance Key Changes for the Financial Year 2025-26

Introduction to TDS Compliance

Tax Deducted at Source (TDS) is an essential aspect of the Indian tax system, aiding in the timely collection of taxes from various sources of income. The financial year 2025-26 has brought forth significant updates to the TDS compliance framework that individuals and businesses must be aware of to ensure adherence to regulatory standards.

Key Changes in TDS Regulations for 2025TDS Compliance Updates for FY 2025-26

By CA Sumit Sharma

Stay compliant and avoid penalties with the latest TDS regulations introduced for FY 2025-26. Below are the key highlights:

🔹 Revised Thresholds

• Rent: TDS applicable only if annual rent exceeds ₹6 lakh

• Insurance Commission: TDS applies above ₹20,000

• Dividend Income: Threshold increased to ₹10,000

🔹 Important Sections

• Section 194R: 10% TDS on business perquisites or benefits provided

• Section 194N: TDS on cash withdrawals exceeding ₹1 crore annually from a bank account

🔹 Compliance Deadlines

• TDS Deposit: By 15th of the following month

• Quarterly Returns Due Dates:

  • Q1: July 31st

  • Q2: October 31st

  • Q3: January 31st

  • Q4: May 31st

• Form 16 issuance by June 15th

🔹 Non-Compliance Penalties

• Interest:

  • 1% per month for late deduction

  • 1.5% per month for late deposit

• Late Fee: ₹200/day for late filing of TDS returns

• Other Penalties:

  • Disallowance of expenses under Section 40(a)(ia)

  • Penalty up to ₹1 lakh for incorrect filing.