Form 26QD : TDS on Contractual and Professional Payments

The CBDT had announced that Individuals/HUFs making contractual or professional payments need to deducted TDS under section 194M from FY 2019-20 (1st Septemeber, 2019). TDS is deducted at 5% if the paid amount exceeds INR 50,00,000 and TDS Return for the same needs to be filed in Form 26QD. The payee gets Form 16D as proof of TDS Deduction.

Let us take an example: A person has made paid a professional INR 55 Lakh on July 20th in the Financial Year. Hence, the tax deducted by the person must be deposited with the central government on or before August 30. Therefore, the person must also issue the TDS certificate (Form 16D) by September 15.

Steps to Fill Form 26QD

  1. Visit the Income Tax e-Filing portal

    Click on the “e-Pay Tax | Challans” option under the Quick Links section.

  2. Click on the “Continue to NSDL Website” option.

    A pop-up message will appear on the screen.

  3. Click on the “Proceed

    Click on the “proceed” option under the Form 26QD section.

  4. Fill up the form with the required details like Tenant, Landlord, TDS, Property etc.

    Click on the “Submit” option to complete the process.

Details Required in Form 26QD

  • PAN of Deductor/Payer
  • PAN of Deductee/Payee
  • Nature of payment (work in pursuance of a contract/commission/brokerage or fees for professional services)
  • Date of contract/agreement
  • Amount paid
  • Number of the certificate under section 197 issued by the Assessing Officer for non-deduction or lower deduction
  • Date of credit
  • The rate of TDS
  • Details of payment of TDS
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FAQs

What is the due date to file Form 26QD?

Form 26QD has to be filed by the 30th of next month of the deduction of the TDS. For example, the TDS of October has to be deposited by the 30th of November of the same year. TDS of November has to be deposited by 30th of the December and not 31st of December.

What is the penalty for late deposit?

Interest @1% is levied if there is a delay in the deduction of TDS. Similarly, 1.5% interest is levied if there is a delay in the deposition of the TDS. Moreover, a late fee of INR 200 per day has to be paid for the late filing of Form 26QD. This penalty cannot be more than the TDS amount.

When will I receive Form 16D?

Form 16D will be given to the payee within 15 days from the date of filing of Form 26QD. It will be provided by the payer/deductor.

Got Questions? Ask Away!

  1. Hey @TeamQuicko

    Thanks for the blog! Just one quick question - Why do we have to report a quarterly breakdown of Dividend Income under IFOS?

    Thank you!

  2. I had received dividend recently but I had noticed that TDS had been deducted. any idea as to why has it happened and is there a way I can claim this TDS?

  3. Hey @HarshitShah

    After the introduction of Budget 2020, dividend income is now taxable in the hands of the shareholder; and is also subject to TDS at 10% in excess of INR 5000 u/s 194 & 194K. Foreign Dividend is taxable at slab rates. TDS is not applicable to such dividends. The taxpayer should report such income under the head IFOS in the ITR filed on the Income Tax Website.

    Hope this helps!

  4. Hi @ameyj

    The amount of TDS deducted shall reflect in your Form 26AS only and it will also reflect the name of the deductor.
    Using the name of the deductor you can find out on which share you have received the dividend and you can also cross-check the same in your bank statement.

    Yes, you are right, TDS is to be deducted when the dividend paid exceeds 5000 INR in a financial year. However, the 5,000 INR limit pertains to all the dividends an individual gets in a year, or the total dividend per shareholder that a company pays out in a year, is left to interpretation, and hence registrars and share transfer agents (RTA) are not taking any chances and are deducting TDS even on small amounts.

    Hope this helps

  5. Hi @TeamQuicko

    Consider that I have 10 shares each of 10 different Indian companies. Each of the 10 companies are declaring a dividend of INR 100 before the FY ends. Now I will be recieving 1000 as dividend from each company, thereby a total of 10,000.

    The 5,000 dividend limit, is it applicable to each company / total dividend recieved by me in a year. If it is applicable to each company, then I would not attract TDS of 10% for dividend.

    Also pl clarify, how would the company B know that I have got shares of Company A,C,D,E so on…

  6. Hey @Abdul_Kaleem_shah

    As per sec.194 of income tax act, TDS liability will arise when the amount of such dividend or the aggregate of the amounts of such dividend distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder, exceeds 5000 Rs.

    Here, the term company not includes aggregate companies and hence limit of 5000 Rs. should be applicable to each company.

    Here, you can read below article covering TDS on dividend income:

    Since, it is purely based on interpretation and ambiguous as opinion vary from experts.

  7. Hey @TeamQuicko

    I tried to file ITR-3 via Quicko’s integration with Zerodha. While filing the ITR, I got an option to switch to the New Tax regime to save additional taxes.
    Since I had some turnover from intraday and FnO (speculative/ business), am I eligible to switch to the new regime through Quicko while filing?
    How do I fill the Form 10-IE? If I haven’t filled the form, would the portal preent me from filing returns altogether?
    Also, once I get rebate (if opted for new regime) / pay dues (if opted for old regime), do I need to go through the hassles of replicating it on the new ITR portal (i.e manually answering the schedule sections)?

    Kind regards

  8. Hi @ChinmayB,

    Yes, you can opt for the new tax regime. However, keep in mind in case a taxpayer has business income and they opt for the new tax regime, they can switch to the old tax regime only once.

    If you opt for the new tax regime, you need to file Form 10-IE before filing the ITR

    Here’s how you can file the Form 10-IE

    When filing your ITR through Quicko, you do not need to enter details on the new ITR portal, since Quicko is a ERI (e-return intermediary) registered with the Income Tax Department.

    Note: ITR filing will be enabled on Quicko in the coming week. So stay tuned for more exciting features!

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