TDS (Tax Deducted at Source)

Government collects tax at source on certain payments so evasion is harder.

As a payer (company), you deduct TDS, deposit with government, and file quarterly returns.

As a payee, TDS shows in Form 26AS and reduces advance tax liability.

Section 192 — salary TDS via payroll software.

Section 194J — professional fees (consultants, lawyers, some vendors) typically 10%.

Section 194C — contractors for labour/services — 1% (individual/HUF) or 2% (others).

Section 194H — commission/brokerage — 5%.

Section 194-I — rent — 10% for land/building, 2% for plant/machinery.

Late deposit: interest + disallowance risk in your tax audit.

Misclassifying employees as consultants to avoid PF can trigger reclassification, penalties, and wrong TDS section.

Consultant invoices need PAN; without PAN, higher rate applies (Section 206AA).

Enable TDS in accounting software day one; maintain challan PDFs.

Reconcile 26AS before filing your ITR — mismatches delay refunds.