TDS has two separate clocks running: the monthly deposit and the quarterly return. Most of the penalties we see arise because someone was tracking one and not the other.
Quarterly return due dates, FY 2026-27
| Quarter | Period covered | Return due |
|---|---|---|
| Q1 | 1 April – 30 June 2026 | 31 July 2026 |
| Q2 | 1 July – 30 September 2026 | 31 October 2026 |
| Q3 | 1 October – 31 December 2026 | 31 January 2027 |
| Q4 | 1 January – 31 March 2027 | 31 May 2027 |
The rule of thumb is the last day of the month following the quarter — with Q4 the exception, which runs to 31 May rather than 30 April.
Payment due dates
Tax deducted in any month must be deposited by the 7th of the following month. March is the exception: deductions made in March 2027 can be deposited up to 30 April 2027.
Depositing on time does not discharge your obligation to file. They are separate compliances with separate penalties, and we regularly meet businesses that have paid every rupee but never filed a return.
What late filing costs
| Failure | Consequence |
|---|---|
| Return filed late | Rs 200 for each day of delay, capped at the total TDS deducted |
| Return not filed, or filed with incorrect particulars | Penalty from Rs 10,000 up to Rs 1,00,000 |
| TDS not deducted when it should have been | Interest at 1% per month |
| TDS deducted but not deposited | Interest at 1.5% per month |
The two interest rates are worth reading twice. Failing to deduct costs 1% a month. Deducting and then holding on to the money costs 1.5% — the law takes a dimmer view of retaining tax you have already taken from someone else.
The penalty for non-filing can be avoided where the tax has been paid to the government, the late fee and interest have been paid, and the return is filed within one year of the due date. That is a meaningful relief, and it is a reason to deal with arrears sooner rather than later.
The knock-on effect most employers miss
Form 16 and Form 16A are generated from filed returns. If your quarterly returns are late, your employees cannot get their Form 16 on time, and their own tax filing is held up. Similarly, a vendor whose TDS credit does not appear in Form 26AS will chase you, not the department.
So a late TDS return is rarely a private problem. It becomes everyone else’s problem too, usually in July, usually loudly.
A practical calendar
- Diarise the 7th of every month for the deposit.
- Diarise the last day of July, October, January and May for the returns.
- Reconcile your deducted amounts against Form 26AS each quarter, not each year.
- Issue certificates promptly once a return is filed, rather than waiting to be asked.