Form 24Q vs Form 26Q: TDS Return Filing for Employers

Almost every employer with staff on payroll files Form 24Q every quarter without a second thought. Where confusion tends to creep in is the moment a business also starts paying professional fees, rent, or contractor invoices, because that TDS goes on an entirely separate return, Form 26Q, filed against the same TAN but reporting a different category of deduction altogether. Getting the two mixed up, or missing one of them because "the TDS return" was treated as a single annual task rather than two distinct quarterly obligations, is one of the more common payroll compliance slips for growing businesses.

Form 24Q: TDS on Salary

Form 24Q is the quarterly return an employer files to report tax deducted at source on salary paid to employees under Section 192 of the Income Tax Act (read with Section 402 for computation of the average rate of tax), renumbered as Section 392 under the Income Tax Act 2025. It has two components:

• Annexure I: Filed with every quarterly return, this captures deductee-wise (employee-wise) details of salary paid and tax deducted during that quarter.
• Annexure II: Filed only with the Q4 return (for the January-March quarter), this captures the complete annual salary breakup for each employee, including all exemptions, deductions under Chapter VI-A, and the final computed tax liability for the full financial year. This annexure effectively reconciles the whole year's payroll TDS in one place.

Because Form 24Q drives the salary figures and TDS credit that show up in an employee's Form 16 and their pre-filled ITR data, accuracy here matters well beyond the employer's own compliance record; errors flow directly into every employee's individual tax filing.

Form 26Q: TDS on Non-Salary Payments to Residents

Form 26Q covers TDS deducted on payments other than salary made to resident deductees, most commonly under sections covering professional or technical fees, contractor payments, rent, commission, and interest other than interest on securities. There is no annual reconciliation annexure equivalent to Form 24Q's Annexure II, since Form 26Q is reporting discrete transaction-level deductions across vendors and payees rather than a running annual computation for a fixed employee base.

A business that pays salaries and also engages contractors, consultants, or landlords needs to run both returns in parallel every quarter, tracking two separate sets of deductee-wise data against the same TAN.

New Form Numbers Under the Income Tax Act 2025

Effective for FY 2026-27, the Income Tax Act 2025 renumbers both forms as part of a broader renumbering of forms and sections across the Act:

The reporting content, deductee-wise structure, and filing mechanism remain fundamentally the same; only the form numbers referenced in the return utility, acknowledgements, and correspondence have changed. Payroll teams and tax software configured to reference the old numbers should be updated, since filings for FY 2026-27 quarters that still cite the old numbering risk rejection or processing delays.

Filing Due Dates

Both forms, old or new numbering, follow an identical quarterly filing calendar:

These are the return-filing due dates, separate from the monthly TDS deposit due date (generally the 7th of the following month, with a relaxed deadline for March deposits). A business can be fully current on depositing TDS every month and still be non-compliant if the quarterly return itself is filed late.

Penalties for Late or Incorrect Filing

Two separate consequences apply to a delayed or incorrect TDS return:

• Late fee under Section 234E: Rs 200 for every day of delay, continuing to accrue from the due date until the return is actually filed, capped at the total amount of TDS deductible for that quarter. This is a mandatory fee, not discretionary.
• Penalty under Section 271H: The assessing officer may separately levy a penalty ranging from Rs 10,000 to Rs 1,00,000 for failure to file the return within the prescribed time, or for furnishing incorrect information in it. In practice, this penalty is generally not imposed if the deductor files the return (along with the Section 234E late fee and any due tax/interest) within one year of the due date, but the exposure exists and is discretionary on the officer, not automatically waived.

Beyond the direct penalty, a late or error-filled TDS return delays the corresponding TDS credit reflecting in the deductee's Form 26AS and AIS, which creates downstream friction for employees and vendors trying to file their own returns and claim credit for tax already deducted from their payments.

Getting the Process Right

For most businesses, the practical fix is to treat Form 24Q/138 and Form 26Q/140 as two separate, parallel quarterly workflows rather than a single "TDS return" task: maintain distinct deductee-wise trackers for salary versus non-salary payments, reconcile TDS deposited each month against what will be reported in the quarter's return before the due date, and build in a buffer before July 31/October 31/January 31/May 31 rather than filing at the deadline. This fits into the same broader payroll and vendor-payment discipline covered in our payroll compliance checklist.