How to file a TDS return: step-by-step guide for employers in India (2026)

It is the last week of July, your payroll team has processed salaries for Q1, deposited TDS every month using Challan ITNS 281N (previously Challan ITNS 281 under the Income Tax Act, 1961), and now the quarterly TDS return is due on July 31. You open the Income Tax e-filing portal, realize you need an FVU file, a CSI file, and validated challan data, and suddenly what seemed like a routine task feels far more complex than it should.

Tax Deducted at Source (TDS) filing is one of the most recurring compliance obligations an employer in India carries. Every quarter, you must report the tax you have deducted from employee salaries and other payments, deposit it with the government, and file a formal statement confirming you have done so. Get it right, and your employees can claim their TDS credits in their Income Tax Returns (ITR) without any mismatch. Get it wrong, or file late, and mandatory late fees begin accumulating at Rs 200 per day.

This guide walks employers through the complete TDS return filing process under the Income Tax Act, 2025, which has been in effect from April 1, 2026 for Tax Year 2026-27 onwards.

Quick reference: what changed from April 1, 2026

The Income Tax Act, 2025 replaced the Income Tax Act, 1961 for all compliance periods from Tax Year 2026-27 onwards. The core workflows remain the same, but forms, section numbers, and terminology have been updated. Here is a quick reference for anyone familiar with the old system:

What is a TDS return? 

A TDS return is a quarterly statement that every person or entity required to deduct TDS must file with the Income Tax Department. It reports the amount of TDS deducted from payments made during the quarter, the challans through which the deducted tax was deposited, and the details of the deductees.

The data filed in a TDS return flows into Form 168 (Tax Passbook) and the Annual Information Statement (AIS) of your employees and vendors. This pre-fills their ITRs and grants them tax credit. If you file late or incorrectly, your employees face tax credit mismatches, and your organization faces mandatory fees and potential penalties.

Who must file a TDS return? 

Any employer or business entity that has deducted TDS during a quarter is required to file a TDS return for that quarter. This includes companies, Limited Liability Partnerships (LLPs), partnership firms, sole proprietors, trusts, and government bodies.

There is no minimum employee threshold: if you deduct TDS for even one employee, filing is mandatory. Before deducting or filing TDS, you must hold an active Tax Deduction and Collection Account Number (TAN).

TDS return due dates 

Quarterly TDS returns are due on the following dates:

• Q1 (April to June): July 31

• Q2 (July to September): October 31

• Q3 (October to December): January 31

• Q4 (January to March): May 31

The Q4 deadline is May 31, not March 31, to allow employers time to finalize full-year tax computations and Annexure II details.

Separately, monthly TDS must be deposited to the government by the 7th of the following month, except for March deductions, which are due by April 30.

How to file a TDS return: step-by-step process 

In simple words this is how it's done: Gather data and challans > Download CSI file > Prepare statement in RPU > Validate via FVU > Upload .fvu to Income Tax portal

Here's the step by step process in detail.

Step 1: Collect and verify required data  

Gather the following before opening the software utility:

• Active TAN and employer PAN details

• PAN of each employee or deductee

• Payment amounts and corresponding TDS deducted during the quarter

• Challan ITNS 281N payment receipts for every TDS deposit made during the quarter, including BSR code, challan serial number, amount, and date of deposit

• Lower or nil deduction certificates under Section 197 (if applicable)

• For Q4 returns: full-year salary breakup, tax regime selection, exemptions under Section 10, Chapter VI-A deductions, and final tax computation for each employee (required for Annexure II of Form 138)

Note on Challan ITNS 281N: Unlike the old system where separate challans were needed for different TDS sections, ITNS 281N allows up to 20 section codes inside a single challan, significantly reducing the number of challans you need to generate each month. However, two restrictions apply: you cannot mix Company and Other than Company deductees in one challan, and you cannot mix Resident and Non-Resident deductees in one challan. Each combination requires a separate challan.

Also note that unlike the old system where challans were filed based on the Assessment Year, Challan ITNS 281N is filed based on the Tax Year. Select the correct Tax Year on the portal before proceeding.

Step 2: Download the Challan Status Inquiry (CSI) file  

The CSI file validates that your challan payment details match official government records.

1. Log in to the Income Tax e-filing portal at incometax.gov.in

2. Navigate to e-File > e-Pay Tax

3. Go to the Challan Status Inquiry (CSI) section

4. Select the date range for the quarter and download the .csi file

Step 3: Download and install the Return Preparation Utility (RPU)  

1. Visit the NSDL Protean TIN portal at tin.tin.nsdl.com

2. Go to Downloads > e-TDS/e-TCS > Quarterly Returns > Regular and download the latest Return Preparation Utility (RPU) and File Validation Utility (FVU)

3. Ensure Java (JRE) is installed and updated on your system before launching RPU

Step 4: Prepare the TDS statement in RPU  

1. Launch RPU and select Regular as the statement type

2. Select the applicable form: Form 138 (previously Form 24Q) for salary TDS, or Form 140 (previously Form 26Q) for non-salary TDS on resident payments, and specify the Tax Year and quarter

3. Enter deductor details: TAN, name, address, and PAN of the authorized signatory

4. Under the Challan tab, enter all payment details from your ITNS 281N receipts (BSR code, date, serial number, and amount)

5. Under the Deductee tab, enter each employee's details, map their payments and TDS amounts to the corresponding challan, and record any lower deduction certificate numbers under Section 197

6. For Q4 returns, complete Annexure II with the full-year salary computation and regime choices for each employee

7. Import the downloaded .csi file when prompted

Step 5: Validate the file using the FVU  

1. Click Validate within RPU. The utility runs the File Validation Utility (FVU) to scan for structural errors, missing PANs, or challan mismatch errors

2. Resolve all flagged errors until validation succeeds

3. Upon successful validation, the utility generates a file with the .fvu extension, which is the file you upload to the portal

Step 6: Upload the FVU file on the e-filing portal  

1. Log in to incometax.gov.in using your TAN credentials

2. Navigate to e-File > Income Tax Forms > File Income Tax Forms > e-File TDS Return

3. Select the Income Tax Act, 2025 and the applicable form (Form 138 for salary, Form 140 for non-salary resident payments), Tax Year, and quarter

4. Upload the generated .fvu file

5. Authenticate using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) via net banking or Aadhaar OTP linked to the authorized officer

6. Submit the return and download the acknowledgement with the Provisional Receipt Number (PRN) for your records

Checking TDS return status and issuing certificates

Checking return status  

After uploading, the Centralised Processing Centre for TDS (CPC-TDS) processes the return within a few business days:

1. Log in to the TRACES portal at tdscpc.gov.in using your TAN credentials

2. Go to Statements / Payments > View Statement Status

3. Select the relevant Tax Year, quarter, and form type

4. Confirm the status displays Processed

Issuing Form 130

Once the Q4 return is processed, download Form 130 (previously Form 16) from TRACES and issue it to your employees by June 15 following the end of the Tax Year.

• Part A: System-generated by TRACES after your Form 138 return is processed. It contains quarterly deduction and deposit summaries

• Part B / Part C: Prepared by the employer. Contains the salary component breakdown, exempt allowances, regime selection, and final tax computation

• Deadline: June 15 following the end of the Tax Year. Delayed issuance attracts a penalty of Rs 100 per day per certificate

How to revise a TDS return 

If you discover a wrong PAN entry, unmapped challans, or missed deductee rows, file a correction return. There is no limit on the number of revisions.

1. Log in to TRACES and download the Consolidated Statement file (Conso file) for the relevant quarter

2. Open RPU, select Correction as the statement type, and import the Conso file

3. Apply required corrections using the standard correction categories: C1 for deductor detail updates, C2 for challan modifications or additions, C3 for deductee row additions, deletions, or updates, C4 for salary detail modifications in Q4 Annexure II, and C5 for PAN corrections

4. Re-validate the file using FVU to generate a new .fvu file

5. Log in to incometax.gov.in and upload the revised .fvu file under the Correction category

6. Monitor TRACES for the updated Form 168 (Tax Passbook) credit for the affected deductee, which typically refreshes within 3 to 7 business days

Interest and penalties for non-compliance 

• Late deduction (failure to deduct): Interest at 1% per month from the date tax was deductible to the date it was actually deducted. Each month or part of a month counts as a full month.

• Late deposit (deducted but not deposited on time): Interest at 1.5% per month from the date of deduction to the date of deposit.

• Late filing fee: Mandatory fee of Rs 200 per day under Section 427 (previously Section 234E under the Income Tax Act, 1961) for every day the return is filed after the due date. The total fee cannot exceed the total TDS amount for the quarter and cannot be waived.

• Penalty for non-filing or incorrect filing: A discretionary penalty of Rs 10,000 to Rs 1,00,000 under Section 461 (previously Section 271H under the Income Tax Act, 1961). This penalty is not levied if the deductor files the return within one month of the due date with all TDS, interest, and late fees fully deposited. Note: this waiver window was reduced from one year to one month effective April 1, 2025.

Summary checklist for employers 

• Collect investment declarations and regime choices from employees at the start of the Tax Year and update quarterly based on verified proofs

• Deposit TDS via Challan ITNS 281N by the 7th of every month, and by April 30 for March deductions. Up to 20 section codes can be covered in a single challan, but use separate challans for Company vs. Other than Company deductees, and for Resident vs. Non-Resident deductees

• Select the Tax Year (not Assessment Year) when generating Challan ITNS 281N on the portal

• Download the CSI file from incometax.gov.in before filing each quarter

• File Form 138 (salary TDS) or Form 140 (non-salary resident TDS) by July 31, October 31, January 31, and May 31

• Verify return status on TRACES and issue Form 130 to all employees by June 15

• Be aware that the penalty waiver window under Section 461 is one month from the due date. File within that window with all dues paid to avoid a discretionary penalty of Rs 10,000 to Rs 1,00,000 on top of the mandatory Section 427 late filing fee

• If you find an error after filing, submit a correction return through TRACES: there is no limit on corrections

• 

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Frequently Asked Questions 

• What is the deadline for filing quarterly TDS returns? 

Quarterly TDS returns are due on July 31 (Q1), October 31 (Q2), January 31 (Q3), and May 31 (Q4). The Q4 deadline is May 31, not March 31, to allow employers time to incorporate year-end salary adjustments and Annexure II details.

• What is the late fee for filing a TDS return after the due date? 

A mandatory fee of Rs 200 per day applies under Section 427 (previously Section 234E under the Income Tax Act, 1961). The total fee is capped at the total TDS amount reported for that quarter and cannot be waived.

• What happens if I do not file the TDS return at all, or file with incorrect information?

A discretionary penalty of Rs 10,000 to Rs 1,00,000 applies under Section 461 (previously Section 271H under the Income Tax Act, 1961). This penalty is not levied if the deductor files the return within one month of the due date and has fully deposited all TDS, late fees, and interest. This one-month waiver window replaced an earlier one-year window effective April 1, 2025.

• Which form do employers file for salary TDS? 

Under the Income Tax Act, 2025, employers file Form 138 (previously Form 24Q under the Income Tax Act, 1961) for salary TDS. It is filed quarterly, with Annexure II required only for the Q4 filing.

• Which form do employers file for non-salary TDS on resident payments? 

Form 140 (previously Form 26Q) covers TDS on non-salary payments to residents, including contractor fees, rent, professional fees, interest, and commission.

• Can I cover multiple TDS sections in a single Challan ITNS 281N? 

Yes. A single ITNS 281N challan can include up to 20 section codes. If your payments span more than 20 section codes, an additional challan is required. However, Company and Other than Company deductees must be on separate challans, as must Resident and Non-Resident deductees.

• Where do I download the CSI file? 

Download the CSI file directly from the Income Tax e-filing portal at incometax.gov.in under e-File > e-Pay Tax > Challan Status Inquiry.

• Which form replaces Form 26AS? 

Form 26AS is replaced by Form 168, called the Tax Passbook, under the Income Tax Act, 2025, for Tax Year 2026-27 onwards.

• When must Form 130 be issued to employees? 

Form 130 (previously Form 16) must be issued to employees by June 15 following the end of the Tax Year.

• What is the difference between a TDS return and a TDS challan? 

A TDS challan (ITNS 281N) is used to deposit the deducted tax amount with the government each month. A TDS return (Form 138 or Form 140) is the quarterly statement filed with the Income Tax Department reporting all TDS deductions and the corresponding challan payments for that quarter. The challan is how you pay; the return is how you report.