Tax Deducted at Source shifts collection to the point of payment. The mechanics are simple; the penalties for getting them wrong are not, and they compound quietly.

Deduct at the right time

TDS is due at payment or credit to the payee's account, whichever is earlier. Businesses frequently deduct only on payment and miss the credit date entirely, which creates a shortfall that surfaces during assessment.

Deposit by the seventh

Tax deducted in a month must be deposited by the 7th of the following month, with March being the exception at the 30th of April. Late deposit carries interest at 1.5% per month, calculated from the date of deduction and not the due date.

File the quarterly returns

Form 24Q covers salary and 26Q covers other payments. Late filing attracts a fee of Rs. 200 per day until filed. More importantly, your payee cannot claim credit for tax you deducted until you report it, which turns a compliance issue into a relationship problem.

The expensive mistake

Failure to deduct where you should have can result in the entire expense being disallowed. A missed deduction on a large payment can therefore cost far more than the tax itself. When in doubt about whether a payment attracts TDS, ask before you pay rather than after.