Q1 TDS Return: Starting the New Financial Year Right

The Q1 return (April–June 2026) is the first TDS return of FY 2026-27. Common issues at the start of a financial year:

New employees not assigned UAN/PAN correctly: Any new employees joining in April must have valid PAN linked before TDS is deducted; invalid PAN attracts 20% TDS
Regime selection for salary employees: All existing employees should have declared their regime choice (new/old) for FY 2026-27 via Form 12BB by April; if not collected, apply new regime by default
Section 194P for senior citizens: If applicable, ensure correct code is used
New vendor payments: Any new vendor engaged from April should have PAN verified; W-9 equivalent (Form 60 for non-PAN vendors) should be collected

TDS Rates — Key Payments (FY 2026-27)

| Nature of Payment | Section | Basic Rate | |---|---|---| | Salary | 192 | As per slab | | Interest on securities | 193 | 10% | | Dividends | 194 | 10% | | Interest other than securities | 194A | 10% | | Winnings (lottery) | 194B | 30% | | Insurance commission | 194D | 5% | | Commission, brokerage | 194H | 5% | | Rent (P&M) | 194I(a) | 2% | | Rent (land, building) | 194I(b) | 10% | | Professional/technical fees | 194J | 10% | | E-commerce | 194O | 1% | | Purchase of goods above ₹50L | 194Q | 0.1% |

Section 194Q (TDS on purchase of goods) applies to buyers with turnover above ₹10 crore in the preceding FY. If your turnover has crossed ₹10 crore for FY 2025-26, Section 194Q applies from April 1, 2026.

Challan Mapping: Critical for Error-Free Return

For each TDS challan paid during April–June:

Note the BSR code (7-digit bank branch code)
Note the Challan serial number (5-digit)
Note the date of deposit
Each challan must be mapped to the deductions in the quarterly return

Unmapped challans cause return-filing failures and TRACES mismatches.

Action Checklist

[ ] Compile all TDS deductions for April, May, June 2026 (salary + non-salary)
[ ] Verify all PANs against TRACES records (bulk PAN verification)
[ ] Confirm all April/May/June challans are paid and downloaded from OLTAS
[ ] Prepare 24Q (salary) — include Form 12BB-based regime selection
[ ] Prepare 26Q (non-salary domestic) — map each deduction to correct challan
[ ] Prepare 27Q (non-resident) if applicable
[ ] File all returns on TRACES by 31st July 2026
[ ] Download Form 16A from TRACES and issue to non-salary TDS recipients (by mid-August)