TDS Compliance and Reporting: Deposit Dates, Quarterly Statements and TAN (Income Tax Act 2025)

Section 397 of the Income-tax Act, 2025 is the compliance section for tax deducted or collected at source. It requires a deductor to hold a TAN, collect the payee's PAN, deposit the tax with the Government, and then file a statement for the period. Under rule 218, tax is generally deposited by the 7th of the next month (30 April for March), and under rule 219 the quarterly statements are due on 31 July, 31 October, 31 January and 31 May.

This guide covers the whole cycle in order: TAN, PAN, deposit, statement, correction. All dates and forms come from section 397 of the Act (as amended by the Finance Act, 2026) and rules 216, 218 and 219 of the Income-tax Rules, 2026. Reviewed on 10 November 2026.

What does section 397 require from a person who deducts TDS?

In sequence, section 397 asks for five things:

1. Get a TAN (tax deduction and collection account number) if you do not already have one: section 397(1)(a).
2. Quote the TAN on all challans, statements and certificates: section 397(1)(b).
3. Collect the payee's PAN, failing which tax goes up: section 397(2).
4. Deposit the tax with the Central Government within the prescribed time: section 397(3)(a).
5. Deliver a statement for the period in the prescribed form, by the prescribed date: section 397(3)(b).

Does every deductor need a TAN?

Mostly yes, under section 397(1)(a). The exceptions are in section 397(1)(c). A TAN is not required for a person deducting under:

• section 393(1), Table Sl. No. 2(i) (rent), 3(i) (transfer of immovable property) or 6(ii) (contractor payments, professional fees, commission or brokerage); or
• section 393(1), Table Sl. No. 8(vi) (transfer of a virtual digital asset), where the person is referred to in section 393(4), Table Sl. No. 12.C(a); or
• section 393(2), Table Sl. No. 17, where a resident individual or HUF deducts tax on consideration for transfer of immovable property; or
• a person notified by the Central Government.

Clause (c) was substituted by Act 4 of 2026 with effect from 1 October 2026. The virtual digital asset exception (second item) and the resident individual or HUF property exception (third item) reflect that change; the older text had no property exception for individuals or HUFs.

Where a TAN is needed, rule 216 prescribes Form 135 for a person other than a Government entity and Form 134 for a Government entity. The application is made before deducting tax. If it was not, it must be made within 30 days from the end of the month in which the tax was deducted (rule 216(4)).

What happens if the payee does not give a PAN?

Section 397(2)(a) obliges every person entitled to receive an amount on which tax is deductible to give a valid PAN to the deductor. If the PAN is not given, section 397(2)(b)(i) says tax is deducted at the highest of:

• the rate in the relevant provision;
• the rate or rates in force; or
• 5% for Table Sl. No. 8(ii) or 8(v), and 20% in any other case.

Related rules in the same sub-section:

• A declaration under section 393(6) or 394(2) without a valid PAN becomes invalid, and the deductor then deducts at the higher rate (section 397(2)(f) and (g)).
• An application for a lower or nil deduction certificate under section 395 without a PAN gets no certificate (section 397(2)(f)(ii)).
• For rent under Sl. No. 2(i), the higher-rate deduction cannot exceed the rent payable for the last month of the tax year or of the tenancy (section 397(2)(e)).
• The higher rate does not apply to certain non-residents (other than companies) for interest on long-term bonds. Under rule 217, a non-resident (other than a company) without a PAN is also spared it for interest, royalty, fees for technical services, dividend and capital asset transfer payments if they give their name, e-mail, contact number, overseas address, residency certificate (if their country issues one) and overseas tax ID.
• A PAN that has become inoperative because Aadhaar was not intimated is treated the same way. Under rule 162(3)(c), tax is deducted at the higher rate in section 397(2) until the PAN becomes operative again.

Worked example 1: rent paid to a landlord with no PAN (tax year 2026-27)

Assume Meena rents out a flat to Ravi, an individual who is not a specified person, at Rs 60,000 a month, and the landlord does not give a PAN. The tenancy runs for the full tax year 2026-27. Ravi deducts under Sl. No. 2(i) in the last month (March 2027).

Step	Working	Amount (Rs)
Annual rent	60,000 x 12	7,20,000
Normal TDS at 2% (PAN given)	7,20,000 x 2%	14,400
Rate when PAN is missing	Higher of 2% or 20%	20%
Tax at 20%	7,20,000 x 20%	1,44,000
Cap under section 397(2)(e)	Rent for the last month	60,000
Tax deducted	Lower of 1,44,000 and 60,000	60,000

When must TDS be deposited? (rule 218)

Deductor	When tax was deducted	Deposit by
Anyone other than a Government office	Any month except March	7 days from the end of that month, so the 7th of the next month (rule 218(2)(b))
Anyone other than a Government office	March	30 April (rule 218(2)(a))
Deductor under Sl. No. 2(i), 3(i), 6(ii), 8(vi) or 393(2) Sl. No. 17 (resident individual or HUF)	Any month	30 days from the end of that month, with a challan-cum-statement in Form 141 (rule 218(3))
Government office, tax paid without a challan	Any time	Same day (rule 218(1)(a))
Government office, tax paid with a challan	Any month	7 days from the end of the month (rule 218(1)(b))

Two more points from rule 218:

• In special cases, the Assessing Officer may, with the prior approval of the Joint Commissioner, allow quarterly payment for deductions under section 392(1) or Sl. Nos. 1(i), 1(ii), 5(ii) and 5(iii). The dates are 7 July, 7 October, 7 January and 30 April (rule 218(4)).
• Payment is made at the Reserve Bank of India, the State Bank of India or an authorised bank. Challan-cum-statement payments (Form 141) must be remitted electronically (rule 218(9) and (10)).

Worked example 2: deposit dates for two deductions in tax year 2026-27

Assume Sunrise Traders Pvt Ltd (a company, so a specified person) deducts tax twice and the deduction is not under one of the Form 141 serial numbers.

Deduction made on	Month ends	Rule applied	Deposit due
12 August 2026	31 August 2026	218(2)(b): 7 days from month end	7 September 2026
28 March 2027	31 March 2027	218(2)(a): March	30 April 2027

Worked example 3: buyer deducting tax on a property purchase (tax year 2026-27)

Assume Ravi, a resident individual, buys a flat for Rs 80,00,000 on 15 September 2026. The stamp duty value is Rs 85,00,000. Under section 393(1), Table Sl. No. 3(i), the rate is 1% of the higher of the consideration and the stamp duty value, and the threshold is Rs 50 lakh, tested on either figure (Note 3).

Step	Working	Result
Threshold met?	80,00,000 and 85,00,000 are both at least 50,00,000	Yes
Base for tax	Higher of 80,00,000 and 85,00,000	Rs 85,00,000
Tax at 1%	85,00,000 x 1%	Rs 85,000
Month of deduction ends	September 2026	30 September 2026
Deposit with Form 141	30 days from 30 September (rule 218(3)(b))	30 October 2026
TAN needed?	Sl. No. 3(i): section 397(1)(c)(i)	No

Which TDS statements are filed, and when? (rule 219)

After depositing, section 397(3)(b) requires a statement. Rule 219(1) prescribes the form by the kind of deduction:

Form	Covers
138	Section 392 (other than 392(7)) and 393(1), Table Sl. No. 8(iii)
140	Sections 392(7), 393(1) (other than Sl. No. 8(iii)) and 393(3), for a deductee other than the Form 144 kind
144	Sections 392(7), 393(2) and 393(3), where the deductee is a non-resident (not a company or foreign company) or a resident but not ordinarily resident
143	Tax collected under section 394(1)
142	Quarterly statement by a virtual digital asset exchange that pays the tax itself (rule 219(2))
141	Challan-cum-statement for Sl. No. 2(i), 3(i), 6(ii), 8(vi) and 393(2) Sl. No. 17 (resident individual or HUF); due within 30 days from the end of the month of deduction (rule 219(5))

Quarterly statements are due on these dates (rule 219(4)):

Quarter ending	Statement due
30 June	31 July
30 September	31 October
31 December	31 January
31 March	31 May, after the tax year of deduction

Each statement carries a signed verification (rule 219(8)). A claim for refund of tax paid under this Chapter is made by the deductor in Form 139 (rule 219(6)).

Can a TDS statement be corrected?

Yes. Under section 397(3)(f), a correction statement can fix a discrepancy or update information within two years from the end of the tax year in which the statement was required to be delivered. For example, the quarter ending 30 June 2026 has a due date of 31 July 2026, which falls in tax year 2026-27. The correction window closes on 31 March 2028.

What happens if TDS is deposited or the statement is filed late?

Default	Consequence	Source
Statement not delivered by the due date	Fee of Rs 200 for every day the failure continues, capped at the tax deductible or collectible, and paid before the statement is delivered	Section 427(1) and (2)
Tax not deducted	Simple interest at 1% for every month or part of a month, from the date the tax was deductible to the date it is deducted	Section 398(3)(a)(i)
Tax deducted but not paid	Simple interest at 1.5% for every month or part of a month, from the date of deduction to the date of payment	Section 398(3)(a)(ii)
Any of the above	The deductor is deemed an assessee in default, in addition to other consequences	Section 398(1)

The interest must be paid before the statement is furnished (section 398(3)(b)). Under section 398(2), a deductor who failed to deduct is not treated as an assessee in default if the payee has filed a return, included the income and paid the tax, and the deductor gives an accountant's certificate in the prescribed form.

Other reporting duties in section 397(3)

• Payments to non-residents. A person paying a non-resident (not a company or foreign company) any sum, whether or not chargeable to tax, must furnish information about the payment in the prescribed form and manner (section 397(3)(d)).
• Interest paid by banks, co-operative societies and public companies. They must report interest below the threshold in Sl. No. 5(ii) and (iii) (section 397(3)(g)(i)). The Board can call for similar statements from others paying residents (section 397(3)(g)(ii)).
• Collectors who fail to collect. A person who fails to collect tax under section 394 is still liable to pay it to the Government (section 397(3)(h)).
• Government offices paying without a challan. The Pay and Accounts Officer or equivalent files a statement in Form 137 by 30 April for March, otherwise within 15 days from the end of the month (rule 218(5) and (6)), and needs an AIN (Form 136).

Real-life example: the missed TAN

Anita runs a small partnership firm that pays interest to a lender for the first time in July 2026. She deducts tax but has no TAN, because nobody told her one was needed (the TAN exemption in section 397(1)(c) does not cover this payment). She applies in Form 135 on 20 August 2026, which is inside 30 days from the end of July (30 August 2026), so she complied with rule 216(4)(b). Had she applied after that date, she would have been late under the rule.

Real-life example: the March deduction

Karan, a CA, pays an invoice to a vendor on 29 March 2027 and deducts tax. His assistant diarises the 7th of April for the deposit. The correct date under rule 218(2)(a) is 30 April 2027. The statement for the January to March quarter is then due on 31 May 2027 under rule 219(4).

What are the common mistakes in TDS compliance?

• Applying the 7th-of-the-month rule to Form 141 cases. For rent under Sl. No. 2(i), property and similar payments, the deadline is 30 days from the end of the month, with a Form 141.
• Using 7 April for March deductions. The date is 30 April.
• Not collecting PAN. A missing or inoperative PAN pushes the rate to the higher rate in section 397(2)(b)(i).
• Assuming a TAN is optional. The exceptions are limited to the cases in section 397(1)(c).
• Treating the quarterly statement as optional once tax is deposited. Deposit and statement are two separate duties under section 397(3)(a) and (b).
• Ignoring the two-year correction window. It runs from the end of the tax year in which the statement was due, not from the date it was filed.

Quick reference: TDS due dates

Item	Date	Source
Monthly deposit	7th of the next month	Rule 218(2)(b)
March deposit	30 April	Rule 218(2)(a)
Deposit with Form 141	30 days from end of month	Rule 218(3)
Quarterly statements	31 Jul, 31 Oct, 31 Jan, 31 May	Rule 219(4)
TAN application, if late	30 days from end of month of deduction	Rule 216(4)(b)
Correction statement	2 years from end of tax year of due date	Section 397(3)(f)

Where this is in the Act

• Section 397(1): TAN, and exceptions in 397(1)(c)
• Section 397(2): PAN and the higher rate
• Section 397(3): deposit, statements, corrections and non-resident reporting
• Rule 162: inoperative PAN; rule 216: TAN application; rule 217: non-resident conditions
• Rule 218: deposit dates and Form 141 payment; rule 219: statement forms and dates

For the rent-specific rules, see TDS on rent under the Income Tax Act 2025.

How do CA firms keep track of TDS deadlines across clients?

A firm with dozens of deductor clients has monthly deposits, four quarterly statements and Form 141 filings running at different dates. Finexo's practice management software tracks these due dates across your client list and reminds you and your clients before they pass. It does not compute TDS or file statements for you.

This article explains the Income-tax Act, 2025 (as amended by the Finance Act, 2026) and the Income-tax Rules, 2026. It is general information, not tax advice. Confirm the position for a specific case with a qualified chartered accountant.