TDS and TCS
Income tax
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Monthly
Withholding compliance starts when a payment is classified and booked. TheTaxCo reviews covered payments and collections, calculates the tax, assists with deposits, files the statements, prepares the certificates and follows up on processing defaults. The monthly working lets your finance team see which entries are complete and which need action before the next payment run.
TDS is tax deducted by a payer; TCS is tax collected on specified receipts. The transaction, payer, recipient, threshold and timing determine the treatment. Salary, rent, contractor payments, professional charges, interest and foreign payments do not all follow one test. Income Tax Department TDS guidance.
Which period and form are involved?
The new forms apply to Tax Year 2026–27. Historical corrections must remain connected to the original period and law; a payment made after 01-04-2026 does not require the same income to suffer deduction again if the obligation was already discharged on an earlier credit. Income Tax Department transition guidance.
New statement | Main use |
|---|---|
Form 138 | Salary and the specified related entries in rule 219 |
Form 140 | Covered non-salary payments outside the Form 144 category |
Form 144 | Specified payments involving non-residents, foreign companies or residents not ordinarily resident |
Form 143 | Tax collected at source |
Form 141 | Challan-cum-statement for specified PAN-based transactions |
The precise transaction and recipient classification decides the route. Form 141 does not cover every property payment or every payment by an individual. Income-tax Rules, 2026, rules 218–219.
What we check each month
The review joins the invoice or contract, ledger credit date, payment date, recipient details, applicable rate and deduction or collection amount. For provisions triggered by the earlier of credit and payment, looking only at the bank run can miss an earlier liability.
New vendors and changed contracts receive particular attention. We check payment purpose, residency, PAN and any valid lower-deduction certificate. An invoice caption such as “reimbursement” or a vendor request for full payment does not resolve the tax treatment by itself.
Payroll data is reconciled to salary changes, employee declarations, joining and leaving details and earlier withholding. For TCS, the collection working is kept distinct from vendor TDS so the receipt, tax and customer record remain traceable.
At quarter end, the statement is compared with the monthly register, deposits and general ledger. Invalid recipient details, unused or mismatched challans and corrections are listed separately. Historical defaults receive a defined correction scope so that old errors do not disappear inside current-quarter totals.
The records and outputs
Your finance team supplies payment and receipt ledgers with both credit and payment dates, payroll changes, new-recipient details, relevant contracts and invoices, certificates, and previous challans or statements. Flag foreign payments, credit notes, unusual reimbursements and settlements when sending the ledger.
We prepare recipient-wise calculations and deposit particulars, assist with authorised payment completion, reconcile challans and file the quarterly statements. We prepare certificates and handle processing defaults and supported corrections, preserving the acknowledgement and correction history. You approve disputed classifications, authorise bank payments and complete any required authentication. The engagement identifies the entities, periods and historical corrections covered.
A correction can involve the payer’s records and the recipient’s credit. We identify who must amend the underlying reporting rather than advising the recipient to change income merely to match an incorrect statement.
Deposit and statement calendar
For ordinary non-government cases under the new Rules, deposit is generally due by the seventh day after month-end, with the March amount due by 30 April. The Form 141 cases instead use the thirty-day period after the month of deduction. Government and other special cases need their own classification.
The quarterly statements covered by rule 219 are ordinarily due on 31 July, 31 October, 31 January and 31 May for the respective quarters. These are distinct from the monthly deposit dates. Income-tax Rules, 2026, rules 218–219.
We agree a records cut-off before the applicable payment and statement dates. Preparation time depends on transaction volume, payroll complexity, non-resident payments and the extent of historic correction work. Late or incomplete data is escalated with the affected amount and action required.
Questions from payers
Does a lower or nil certificate end the compliance work? No. The payment must fall within the certificate’s terms and still be recorded and reported as required. Retain the certificate with the recipient working.
Can an individual have a deduction obligation? Yes, for specified transactions. We test the payer, recipient and payment before selecting the PAN-based or other route.
What happens if we already paid without deducting? Send the agreement, ledger date, payment date and recipient details. We assess the default and available correction from those facts; the next quarterly statement alone may not resolve it.
Related services
Email TheTaxCo, message us on WhatsApp or book a call. Share the quarter, approximate monthly transaction count, whether payroll or foreign payments are involved, and any outstanding default notice.