Update (5 November 2026): the Q2 due date (31 October 2026) has passed. The next TDS/TCS statements, for Q3 (October–December 2026), are due by 31 January 2027. For statements relating to tax year 2026-27, the late fee and penalty are under Sections 427 and 461 of the Income Tax Act, 2025 (Sections 234E and 271H of the 1961 Act), and quarterly statements under Section 397 (Section 200(3) of the 1961 Act).
Quick answer: The TDS return for Q2 of FY 2026-27 (July to September 2026) is due by 31st October 2026. File late and you pay a fee of ₹200 per day until the return is filed, capped at the total TDS in that statement. On top of that, an officer can levy a further penalty of ₹10,000 to ₹1,00,000 under Section 271H. The fee applies even if you deposited every rupee of TDS on time.
Most businesses treat TDS as a monthly deposit and forget the return is a separate job. It is not. The deposit sends the money to the government. The return tells the government whose money it was. Skip the second part and your deductees lose their tax credit, and you get billed for it.
Who Must File a TDS Return?
Anyone who deducts tax at source and holds a TAN. That covers:
- Employers deducting TDS on salary
- Businesses paying contractors, professionals, rent, commission or interest above the threshold limits
- Companies, firms, LLPs, and individuals or HUFs who are required to deduct TDS
- Anyone making payments to non-residents that attract TDS
If you deducted TDS in the quarter, you file. If you deducted nothing, you generally file a nil statement only when required, so check with your CA.
TDS Return Due Dates for FY 2026-27
TDS returns are filed quarterly. The same dates apply to salary TDS (Form 24Q), TDS on other resident payments (Form 26Q) and TDS on payments to non-residents (Form 27Q):
- Q1 (April to June): 31st July
- Q2 (July to September): 31st October
- Q3 (October to December): 31st January
- Q4 (January to March): 31st May
For payments made on or after 1st April 2026, the Income-tax Act, 2025 applies. The quarterly dates have stayed the same, but section references, challans and form numbers have changed. Use the new-Act references for anything paid or credited from that date.
TDS Deposit Due Dates: Don’t Mix These Up
The deposit and the return have different deadlines.
- Deposit: by the 7th of the following month for most non-government deductors. TDS deducted in September 2026 is due by 7th October 2026
- March exception: TDS for March is deposited by 30th April
- Return: quarterly, by the dates above
Every deposit made in July, August and September gets reported together in the Q2 return.
What Late Filing Actually Costs
1. Late fee (Section 234E, now Section 427): ₹200 for every day the return is late, from the day after the due date until the day you file. The total cannot exceed the TDS amount in that statement. It is mandatory, it is calculated automatically, and it must be paid before the return is accepted.
A quick example. Your Q2 return is due 31st October. You file on 30th November. That is 30 days of delay, so ₹6,000 in fees. If your total TDS for the quarter was only ₹4,000, the fee is capped at ₹4,000.
2. Penalty (Section 271H): ₹10,000 to ₹1,00,000 for failing to file on time, or for filing with incorrect details. This is separate from and in addition to the daily fee.
3. Interest: if TDS was deducted late, interest is 1% per month. If it was deducted but deposited late, interest is 1.5% per month, counted from the date of deduction to the date of deposit. Part of a month counts as a full month.
4. Prosecution: in serious cases, where TDS was deducted and never deposited, Section 276B can lead to prosecution. This is rare for honest delays, but it is the reason TDS is treated differently from other taxes.
The Hidden Cost: Your Vendors and Employees Suffer Too
This is the part that damages relationships.
- Until you file, Form 16A (non-salary) and Form 16 (salary) cannot be generated
- The deductee’s Form 26AS and AIS won’t show the credit, so they can’t claim it in their ITR
- Your expense deduction can be disallowed if TDS was not deducted or not deposited as required, which raises your own tax bill
A vendor who cannot claim credit for tax you deducted will call you. Several will stop working with you.
Common TDS Return Mistakes
- Missing or wrong PAN of the deductee. Without a valid PAN, TDS must be deducted at a higher rate, either 20% or the prescribed rate, whichever is higher. Collect PAN before you process any payment
- Challan mismatch. The BSR code, challan serial number and deposit date in the return must match the challan exactly. One wrong digit creates a short-payment default notice
- Wrong section or rate. Using the wrong section for a payment leads to short deduction and interest
- Counting the fee from the wrong date. The ₹200 per day runs from the return due date, not the deposit due date
- Ignoring the TRACES default notice. Defaults do not disappear. They accumulate, and they get harder to clear with time
- Salary TDS in the wrong quarter. Advance salary paid in September belongs in Q2, not Q3
A Simple Q2 Checklist
- List every payment from July to September that attracted TDS
- Confirm the deduction was at the right rate and the right section
- Match each challan to the deduction it covers
- Verify PAN of every deductee
- Prepare and validate the statement in the NSDL file utility
- File well before 31st October. Aim for the 20th, since this date also overlaps with audit-case ITR filing
- Download Form 16A / Form 16 and issue to deductees
Already Missed a Quarter?
File now. The ₹200 per day fee is running, and every extra day adds to it. If your earlier quarters also have errors, a correction statement on TRACES can fix them. You cannot correct a previous quarter’s mistakes through the current quarter’s return.
Note: Due dates and fees are as of September 2026 and are based on the standard position for FY 2026-27. Section references depend on whether the payment was made before or after 1st April 2026. Dates can change through official notification. Confirm your specific position with your CA before filing.
Related: see our full guide on how TDS works on NRI transactions.