Tax Deducted at Source (TDS) is a mechanism where a person or entity making certain payments (like salary, interest, rent, professional fees, etc.) deducts tax before releasing the amount to the payee. As we enter April 2025, it’s crucial to understand the latest TDS rules to ensure compliance and avoid penalties.

1. What is TDS & How Does It Work?

TDS is a way for the government to collect tax in advance. The deductor (payer) deducts a certain percentage of tax before making payments, deposits it with the government, and issues a Form 16/16A to the deductee (recipient). The deductee can claim credit for this TDS while filing their Income Tax Return (ITR).

2. Key TDS Rates & Applicable Sections (FY 2024-25 / AY 2025-26)

3. Important TDS Compliance Rules (April 2025 Updates)

A. Lower/Nil TDS Deduction (Form 13 & 15G/15H)

• If your total income is below taxable limits, submit Form 15G (for individuals <60 years) or Form 15H (senior citizens) to avoid TDS on interest.
• For lower TDS deduction, apply to the Income Tax Department via Form 13.

B. TDS Due Dates & Penalties

• TDS Payment Due Date: 7th of the next month (e.g., TDS for April 2025 must be paid by 7th May 2025).
• Quarterly TDS Returns (Form 24Q, 26Q, 27Q, 27EQ):
  • Q1 (Apr-Jun): 31st July 2025
  • Q2 (Jul-Sep): 31st October 2025
  • Q3 (Oct-Dec): 31st January 2026
  • Q4 (Jan-Mar): 31st May 2026
• Late Payment Penalty: Interest @ 1.5% per month under Section 201(1A).
• Late Filing Penalty: ₹200/day under Section 234E (max. up to TDS amount).

C. TDS on E-Commerce (Section 194-O)

• E-commerce operators (Amazon, Flipkart, Swiggy, etc.) must deduct 1% TDS on payments to sellers if annual sales exceed ₹10 lakh.

D. TDS on Crypto & Virtual Digital Assets (Section 194S)

• 1% TDS applies on payments for crypto/VDAs if the transaction exceeds ₹50,000 (₹10,000 for specified persons).

4. How to Check & Claim TDS Credit?

• Verify TDS deductions using Form 26AS (Annual Tax Statement) or AIS (Annual Information Statement) on the Income Tax Portal.
• If TDS is deducted but not reflected in Form 26AS, contact the deductor for correction.

5. Common TDS Mistakes to Avoid

• Not deducting TDS when required→ Penalty + interest.
• Delayed TDS payment→ 1.5% monthly interest.
• Incorrect PAN details→ TDS credit mismatch.
• Missing TDS return filing→ Late fees up to ₹10,000.

6. Conclusion

• Understanding TDS rules helps in smooth tax compliance and prevents unnecessary penalties. Ensure timely deduction, payment, and filing of TDS returns to avoid legal hassles.