As freelancing and consultancy work continues to rise in popularity across Kerala, more individuals are choosing self-employment for flexibility, independence, and financial growth. However, with this freedom comes a responsibility—especially in terms of taxes. One critical area often overlooked by freelancers and consultants is TDS (Tax Deducted at Source) compliance.
Many believe that TDS return filing only applies to large firms or companies. In reality, if you are a freelancer or consultant receiving income from clients, or if you are paying subcontractors or assistants, you may be liable for TDS deductions and return filings under the Income Tax Act, 1961. Understanding your role in TDS compliance is essential not just to avoid penalties but also to maintain financial transparency and professional credibility.
This blog will walk you through why TDS return filing is crucial for self-employed professionals in Kerala, and how you can simplify compliance with expert support from OurTaxPartner.com.
What is TDS and Why Does It Matter?
TDS or Tax Deducted at Source is a method of collecting income tax from the very source of income. It ensures that taxes are deducted when a payment is made and remitted to the government on behalf of the recipient. This system applies to various types of income including salaries, professional fees, rent, interest, and more.
For freelancers and consultants in Kerala, this means two things:
- Your clients may deduct TDS from payments made to you.
- If you pay professionals, rent, or salaries yourself, you may need to deduct and file TDS returns.
Are Freelancers and Consultants Liable to Deduct TDS?
If you’re a freelancer or consultant with a registered business name (sole proprietorship, partnership, or private limited), and you make specified payments above threshold limits, you’re legally bound to deduct TDS.
Some common cases include:
- Paying another professional or consultant more than ₹30,000 annually – TDS @10%
- Paying rent over ₹2,40,000 per annum – TDS @10%
- Contractual payments to service providers exceeding ₹30,000 – TDS @2%
In all these cases, you must obtain a TAN (Tax Deduction and Collection Account Number), deduct TDS while making payments, deposit the tax with the government, and file quarterly TDS returns.
Why Filing TDS Returns is Non-Negotiable
1. Legal Mandate
Failing to file TDS returns on time is a violation of Section 234E of the Income Tax Act. Penalties of ₹200 per day can be levied until the return is filed. Continued non-compliance can attract further interest, penalties, and even prosecution in extreme cases.
2. Avoid Mismatch in Form 26AS
When your clients deduct TDS and deposit it, it reflects in your Form 26AS. If you fail to file or wrongly file your own TDS return, the credits may not match, affecting your final income tax filing and resulting in notices or refund delays.
3. Smooth Processing of Refunds
Many freelancers end up overpaying tax through TDS. Proper filing ensures that you can claim refunds smoothly when you file your personal ITR.
4. Professional Credibility
Being TDS compliant helps build trust with your clients, especially large companies and government agencies. It positions you as a law-abiding professional and may even be a requirement for some contracts or government projects.
5. Enables Business Growth
Once you start hiring junior consultants, renting office space, or outsourcing work, you become a payer of professional income. Filing TDS returns keeps you eligible for government registrations, loans, and future expansion plans.
What if You Don’t Comply?
Non-compliance with TDS regulations can result in:
- Daily penalties of ₹200 until returns are filed
- Interest at 1–1.5% per month on unpaid TDS
- Disallowance of expenses in your income tax return
- Notices and legal scrutiny from the Income Tax Department
- Loss of reputation with clients and regulatory agencies
Documents and Information Needed for TDS Filing
- TAN and PAN details
- Details of deductees (PAN, name, payment type, amount)
- Challan details of TDS paid (if applicable)
- Nature of services and payment type
- Digital Signature Certificate (DSC) if filing online
How OurTaxPartner.com Makes It Easy
Whether you’re new to tax compliance or already deducting TDS, OurTaxPartner.com offers end-to-end support for freelancers and consultants in Kerala.
Services include:
- Assessment of TDS liability
- TAN registration and setup
- Calculation of TDS amount
- Online payment of challans
- Quarterly TDS return filing (Form 26Q, 27Q, etc.)
- Form 16A generation and sharing
- TDS reconciliation with Form 26AS
All services are handled by experienced tax professionals who understand the unique needs of independent professionals and consultants in Kerala.
Conclusion
Freelancing and consulting may offer flexibility, but tax compliance is still mandatory. If you’re operating independently in Kerala and dealing with professional payments—whether receiving or paying—TDS return filing is critical to avoid penalties and stay legally sound. It also improves your business prospects and ensures accurate income declarations for tax filings.
Let experts handle the complexity while you focus on delivering value to your clients. Visit OurTaxPartner.com today to simplify your TDS compliance journey.
PEAK Business Consultancy Services – Kerala’s Trusted Partner for TDS and Tax Compliance.
