What is Form 26Q?

What is Form 26Q?

Form 26Q is a quarterly TDS return filed for non-salary payments made to resident taxpayers. Whenever a business, institution, or individual deducts Tax Deducted at Source (TDS) on payments other than salaries, they must report those deductions through Form 26Q.

It is filed under Section 200(3) of the Income Tax Act and helps the Income Tax Department keep track of all TDS activity on transactions like contractor payments, professional fees, rent, interest, commissions, and other specified payments.
Unlike Form 24Q (used exclusively for salary TDS), Form 26Q captures all non-salary deductions, making it essential for businesses of all sizes.

Who is Required to File Form 26Q?

Form 26Q must be filed by any person or business that deducts TDS on payments other than salary. This includes a wide range of entities that make regular payments to vendors, professionals, or service providers.

Companies, partnership firms, and LLPs must file Form 26Q whenever they pay someone and deduct TDS as per the Income Tax Act.

Banks have to file it when they deduct TDS on interest paid to customers.

Businesses that hire professionals like consultants, lawyers, designers, or auditors must also submit this form.

Real estate companies need to file Form 26Q when they deduct TDS on large rental payments.

Insurance companies use it when they deduct TDS on commissions paid to agents.

Brokerages, gaming companies, and lottery operators must report TDS deducted on winnings.

Simply put, if you deduct TDS on any non-salary payment, you must file Form 26Q every quarter.

Payments and Key TDS Sections Covered

Form 26Q applies to a wide range of non-salary payments, and each type of payment is linked to a specific TDS section. These sections help the Income Tax Department identify the nature of the payment and the correct rate of TDS to be deducted.

Below are the most commonly used sections under Form 26Q:

Higher TDS if PAN is Not Provided

If the deductee fails to provide a valid PAN, TDS must be deducted at a flat 20% under Section 206AA—regardless of the normal lower rate. This makes PAN mandatory for accurate TDS reporting.

Details Required in Form 26Q

Form 26Q has only one annexure, and it captures all the essential details related to TDS on non-salary payments. The information required is divided into three main parts:

1. Deductor Details

These are the details of the person or organization deducting TDS.
You must provide:

• Name of the deductor
• PAN (Permanent Account Number)
• TAN (Tax Deduction and Collection Account Number)
• Complete address

2. Challan Details

These refer to the TDS amounts you deposited with the government.
You need to mention:

• BSR code of the bank
• Date on which TDS was deposited
• Challan serial number
• Exact amount deposited as TDS

3. Deductee Details

These are details of the person/entity whose payment was subject to TDS.
Include:

• Name and PAN of the deductee
• Nature of payment (professional fee, rent, interest, etc.)
• Amount paid or credited
• TDS rate applied
• Reason for NIL or lower TDS, if applicable

Deposit Rules and Due Dates 

TDS deducted on non-salary payments must be deposited by the 7th of the next month for deductions made from April to February. For March, the deposit deadline is 30th April.
Form 26Q must be filed every quarter by the following due dates:

How to File Form 26Q 

• Collect TDS data: Gather all deductee details, challan information, payment records, and TDS amounts.
• Prepare the return: Use the RPU (Return Preparation Utility) from TRACES/NSDL to enter all required data.
• Validate the file: Run the file through FVU (File Validation Utility) to check for errors.
• Submit the return: Upload the validated file on the TRACES portal or submit it offline at a TIN-FC center.
• Keep records: Download the acknowledgement after submission.
• Offline filing: Attach Form 27A with the return.

A NIL return is optional but recommended to maintain compliance.

Penalties & Interest for Non-Compliance

Interest (Section 201)

The Income Tax Department charges interest when TDS is not handled on time.

Interest is calculated on a monthly basis, and even a delay of a single day counts as a full month.

Penalties

• Section 234E: A late filing fee of ₹200 per day until the TDS return is filed. This fee cannot exceed the total TDS amount.
• Section 271H: A penalty between ₹10,000 and ₹1,00,000 for incorrect or delayed filing.
• Non-deposit of TDS: Can lead to prosecution, with imprisonment ranging from 3 months to 7 years, along with a fine.

Penalty Waiver (Section 271H)

A penalty can be avoided if:

• Full TDS is deposited,
• Interest and late fees are paid,
• The return is filed within 1 year of the due date.

Rectifying Errors in Form 26Q

Errors in Form 26Q can be fixed by filing a Correction Return or updating details directly through the online TRACES portal. Multiple corrections are allowed. However, from April 1, 2025, revisions can be made only for TDS returns filed within the last six financial years.

Conclusion

Form 26Q is an essential compliance requirement for any business or entity that deducts TDS on non-salary payments. Filing it accurately ensures proper TDS credit to deductees, prevents penalties, and keeps your organization fully compliant. With increasing scrutiny by tax authorities, timely and error-free Form 26Q filing is no longer optional—it’s a must for all responsible businesses.