TDS Returns for Q4 FY 2025-26: the 31 May 2026 deadline, the four forms, and the late fee that quietly compounds

The Q4 TDS return deadline of 31 May 2026 is fourteen working days away. In our practice it is consistently the most-missed of the four quarterly deadlines, partly because Q4 happens to coincide with year-end audit prep and annual financial close, and partly because the late fee under section 234E is small enough per day that the urgency feels manageable, until the cumulative cap is reached.

This post covers the four TDS return forms, who files each, the late fee mechanics, the interaction with Form 16 and Form 16A issuance, the common mismatch errors we see, and the practical workflow for getting the Q4 return clean on the first pass.

The four forms and who files each

The Income-tax Rules 1962 prescribe four separate TDS / TCS return forms, each covering a different category of deduction. Most operating companies need to file two of them each quarter, larger or more complex companies file three, and only a narrow subset files all four.

Form 24Q is for salary TDS under section 192. It covers TDS deducted from employees' salaries, perquisites, bonuses, leave encashment, and any other payment treated as salary income. Every company with even one employee on the payroll for whom TDS was deducted in the quarter must file Form 24Q. The form includes a deductee-wise breakdown plus an annexure detailing each employee's annual salary, deductions claimed, exemptions, and tax computation.

Form 26Q is for non-salary TDS to residents. It covers section-by-section deductions: section 194A (interest other than on securities), 194C (contractor payments), 194H (commission and brokerage), 194I (rent), 194J (professional and technical services), 194Q (purchase of goods above ₹50 lakh from a single seller), and the various other sections under Chapter XVII-B. Almost every operating company files Form 26Q every quarter because the section-194C and 194J thresholds are crossed routinely.

Form 27Q is for TDS on payments to non-residents under section 195 and the related provisions. It covers payments such as foreign professional fees, royalty, technical services, interest to NRIs, and capital gains on transfer of shares. Companies with foreign vendors, foreign consultants, or foreign-domiciled subsidiaries typically file Form 27Q. The form includes the country of the deductee and the applicable Double Taxation Avoidance Agreement (DTAA) rate.

Form 27EQ is for Tax Collected at Source (TCS) under section 206C. Scrap dealers, parking-lot operators, sellers of alcohol and tobacco, e-commerce operators (section 206C(1H) on the sale of goods above ₹50 lakh), and a few specialised categories file this form.

The 31 May deadline and the four quarterly dates

The TDS return calendar prescribed under Rule 31A of the Income-tax Rules 1962 is:

• Q1 (April-June), due 31 July
• Q2 (July-September), due 31 October
• Q3 (October-December), due 31 January
• Q4 (January-March), due 31 May

The Q4 deadline is two months after quarter-end (vs. one month for the other three) because it is bundled with year-end reconciliation. This extra month is often misunderstood as "the deadline is in late June." It is not. It is 31 May.

The section 234E late fee, in numbers

Section 234E imposes a fee of ₹200 per day from the day after the due date until the return is filed. The fee is capped at the total TDS amount in that return.

A simple example. A mid-sized company files Form 26Q for Q4 fifteen days late on 15 June 2026, with total TDS of ₹4 lakh in the return. The late fee is ₹200 × 15 = ₹3,000.

A more painful example. A small company files Form 26Q for Q4 sixty days late on 30 July 2026, with total TDS of ₹40,000. The late fee would compute to ₹200 × 60 = ₹12,000, but it is capped at the TDS amount of ₹40,000. The company pays the lower of the two, so the cap saves the day. But the cap caps the fee, not the optics: when the assessing officer reviews the year-end position, multiple late filings stack up as a compliance-quality signal.

The fee is treated as a tax for the purpose of recovery and cannot be waived by the assessing officer. The only way to avoid it is to file on time. There is no concept of a section 234E appeal.

Section 271H, the separate penalty that often gets waived

Section 271H imposes a separate penalty of between ₹10,000 and ₹1 lakh per return for failure to furnish the TDS statement within the prescribed time. This is at the assessing officer's discretion.

In practice, section 271H is rarely imposed when the return is eventually filed within one year of the due date and the late fee under section 234E has been paid. The assessing officer treats the 234E fee as sufficient sanction for the late filing. Section 271H typically only triggers when the return is filed more than a year late or when the assessing officer suspects wilful default (e.g., the company deducted TDS, did not deposit it, and did not file the return).

Interest under section 201(1A), the other charge to watch

Interest under section 201(1A) applies separately to the TDS amount itself, not to the return filing. The two interest rates to know:

• 1 per cent per month from the date TDS should have been deducted until the date it was actually deducted (applicable when deduction itself was late).
• 1.5 per cent per month from the date of deduction until the date of deposit (applicable when the deducted TDS was not deposited by the 7th of the following month).

A return filed on time but covering TDS that was deposited late will still attract section 201(1A) interest on the late deposit. The return-filing fee under section 234E is independent of this.

The Form 16 and Form 16A chain

The TDS return is not the end of the obligation. After the return is processed by the Centralised Processing Centre (CPC) at Bengaluru, the deductor must download and issue TDS certificates to the deductees.

Form 16 (for salary employees) for FY 2025-26 must be issued by 15 June 2026. It is the consolidated annual certificate covering all four quarterly Form 24Q returns. The Form 16 is gated on successful processing of all four Form 24Q returns for the financial year, plus the annexure-II salary details for Q4. If any of the four quarterly returns has unresolved errors, the Form 16 cannot be downloaded for any employee.

Form 16A (for non-salary deductions) must be issued within fifteen days of the relevant quarterly return due date. For Q4 deductions, Form 16A is due 15 June 2026. It is downloaded from the TRACES portal.

Form 16B (for TDS on sale of property under section 194-IA) is issued by the buyer to the seller within fifteen days of the Form 26QB filing.

Form 16C (for TDS on rent under section 194-IB) is issued by the tenant to the landlord within fifteen days of the Form 26QC filing.

Failure to issue Form 16 or Form 16A within the prescribed time attracts a penalty under section 272A(2)(g) of ₹100 per day per certificate, until issued. Employees and vendors typically need these certificates to file their own returns, so delays cascade.

The five most-common Q4 filing errors

In our annual filing cycle, five error patterns account for most of the rework.

Error one: PAN mismatch. The deductee's PAN in the return does not match the PAN on the official records. The CPC marks the deduction as "PAN not present" and the deductee does not see the TDS in their Form 26AS. Fix: verify every deductee's PAN against the income tax e-verify tool before filing.

Error two: incorrect challan details. The challan serial number, BSR code, or date of deposit is entered incorrectly. The CPC cannot match the deduction to a deposit and flags the return as having an "unmatched challan." Fix: pull challan details directly from the OLTAS system rather than typing them.

Error three: salary annexure missing in Q4 Form 24Q. The annexure-II (which has the year's salary breakdown for each employee) is mandatory only in the Q4 Form 24Q. It is often forgotten because the previous three quarters did not need it. Fix: explicitly add the annexure step to the Q4 filing checklist.

Error four: TDS rate mismatch on section 195 payments. The wrong DTAA rate is applied, or the No-PE certificate is missing. The deductee abroad receives a refund issue in their home country tax filing. Fix: confirm the DTAA rate and the deductee's residency certificate before deducting; obtain Form 10F if required.

Error five: TDS deducted but not paid in time. The TDS was deducted from the vendor / employee but not deposited by the 7th of the following month. Section 201(1A) interest applies, plus the corresponding section 40(a)(ia) disallowance in the employer's own income tax return. Fix: automate TDS deposit via the same payroll / AP cycle as the actual payment.

Our practical Q4 workflow

For retainer clients we follow a five-step workflow that has Q4 filing closed by 25 May (with a buffer):

1. First week of May. Pull all FY-end salary annexure data from payroll. Reconcile against employee Form 12BB declarations.
2. Second week of May. Pull Q4 (January-March) deduction data from the AP system. Reconcile each section-wise total against the corresponding challan series.
3. Third week of May. Validate every deductee PAN against the income tax e-verify tool. Fix mismatches.
4. Fourth week of May. File all four forms (24Q, 26Q, 27Q, 27EQ as applicable) by 25 May. Submit correction statements for any prior-quarter mismatches identified during reconciliation.
5. First half of June. Download Form 16 (by 15 June) and Form 16A (by 15 June). Issue to employees and vendors. Address any defective return notices.

The buffer between 25 May and 31 May absorbs portal load issues, last-minute PAN clarifications, and the inevitable email asking for a salary breakup that was never received from a particular employee.

What to do this week

Pull the Q4 deduction data now, even if the return will be filed in the last week of May. The reconciliation takes a few days and the PAN validation typically surfaces 1-2 per cent of deductees with issues that need correction. Building in this buffer is the difference between a clean 25 May filing and a 31 May scramble that ends with a defective return notice in mid-June.