Tax Deducted at Source (TDS) is a key compliance requirement for businesses and organizations in India. Whether you’re a startup in Kerala or a well-established company, TDS return filing is not just about depositing tax—it’s about ensuring accuracy in every detail submitted to the Income Tax Department. Even minor mistakes can lead to costly consequences including demand notices, penalty charges, interest, and long-term compliance scrutiny.
In this article, we’ll walk you through the most common TDS return filing mistakes that trigger income tax notices and how you can avoid them. If you wish to ensure full compliance without stress, consider professional help from experts like OurTaxPartner.com, Kerala’s trusted tax consultants.
1. Non-Filing or Late Filing of TDS Returns
One of the most frequent mistakes is missing the quarterly TDS return deadlines. This leads to a late filing fee of ₹200 per day under Section 234E, and in some cases, penalties under Section 271H (up to ₹1,00,000).
Solution: Track quarterly due dates diligently: 31st July (Q1), 31st October (Q2), 31st January (Q3), and 31st May (Q4). You can set automated reminders or outsource your filing to professionals like OurTaxPartner.com.
2. Quoting Wrong PAN or TAN Details
A single typo in the PAN or TAN can result in your return being rejected or credit not being passed to the deductee. This may prompt mismatch notices and affect your vendor or employee relationships.
Solution: Always verify PANs from official documents and use correct TANs in each return. For businesses with multiple branches, ensure correct TAN is used for each unit.
3. Incorrect TDS Deduction Rates
Many deductors apply the wrong TDS rate based on guesswork or outdated information. For instance, deducting 1% instead of 10% on professional fees under Section 194J could attract a short deduction notice and liability to pay the difference with interest.
Solution: Refer to the latest TDS chart published by the Income Tax Department or seek advice from tax consultants before applying deduction rates.
4. Non-Payment or Delayed Payment of TDS
Deducting TDS but not depositing it on time is a serious offense. Interest at 1.5% per month is levied for late payment, and it could also attract prosecution in some cases.
Solution: Ensure TDS is deposited by the 7th of the following month. Use Challan ITNS 281 for payment, and double-check the section code and challan numbers.
5. Errors in Challan Details
Mismatching challan details such as incorrect BSR code, wrong date of deposit, or incorrect amount may result in unlinked challans and notices from the CPC (Centralized Processing Centre).
Solution: Keep a record of every TDS challan and cross-verify them with your filing software. If an error is detected, file a correction statement immediately.
6. Not Issuing TDS Certificates on Time
Businesses must issue Form 16 (for salaries) and Form 16A (for other payments) within prescribed timelines. Failure to do so may affect the deductee’s tax filing and invite complaints and legal scrutiny.
Solution: Generate and distribute TDS certificates promptly after each quarter. Using professional services can automate and track this process efficiently.
7. Mismatch Between TDS Returns and Form 26AS
One of the main reasons tax notices are issued is due to mismatches between the TDS returns filed and Form 26AS (Tax Credit Statement). Discrepancies in deduction amount, PAN, or date of payment can trigger system-generated notices.
Solution: Always reconcile your TDS data with Form 26AS before filing your Income Tax Return. Professional TDS filing experts can ensure alignment and avoid future disputes.
8. Using the Wrong TDS Form
Filing Form 26Q instead of 27Q (for non-resident payments), or submitting Form 24Q with incorrect salary data, can cause processing errors and rejections.
Solution: Understand the purpose of each TDS form:
- Form 24Q – Salaries
- Form 26Q – Domestic non-salary payments
- Form 27Q – Non-resident payments
- Form 27EQ – TCS
9. Ignoring Defaults or Error Notices
Many businesses ignore default notices or CPC intimation emails, thinking they are unimportant. This can escalate into larger issues like demand notices, interest, and compliance grading downgrade.
Solution: Regularly log into the TRACES and income tax portals to check for notices or demands. Address errors proactively with correction filings or expert representation.
10. Manual Data Entry and Lack of Review
Manual TDS return preparation increases the risk of mistakes. Failing to validate files before uploading or skipping data checks can lead to rejected returns or inaccurate reporting.
Solution: Use approved return preparation utilities or hire a TDS consultant to handle filings professionally. This reduces human error and ensures compliance with the latest e-filing formats.
Protect Your Business with Expert TDS Filing Support
TDS compliance is not just about fulfilling a legal obligation—it’s about maintaining your business reputation, financial health, and trust with stakeholders. Small errors can lead to cascading penalties and income tax scrutiny.
That’s why many businesses in Kerala turn to experts like OurTaxPartner.com. Their dedicated team provides end-to-end support including:
- Accurate TDS deduction calculations
- Timely challan payments and filing
- TRACES portal management
- Correction filing and mismatch resolution
- Issuance of TDS certificates
- Audit and CPC notice handling
By outsourcing your TDS filing to professionals, you not only reduce risk but also save time and money that can be better spent on growing your business.
Conclusion
Compliance with TDS filing is non-negotiable, and the Income Tax Department uses advanced systems to detect even the smallest mismatches. Avoiding these common mistakes can save you from penalties, legal complications, and wasted hours of rectification.
Let the experts help you stay ahead. Visit www.ourtaxpartner.com/filing-service/tds-compliance/ today for streamlined, accurate, and worry-free TDS return filing services in Kerala.
