Form 24Q — Quarterly TDS Return on Salary Under Section 192

Form 24Q — Quarterly TDS Return on Salary Under Section 192

Every employer who deducts TDS from the salaries of its employees is required to file a quarterly TDS return in Form 24Q with the Income Tax Department. Form 24Q is the prescribed statement under Section 192 of the Income Tax Act, 1961, covering Tax Deducted at Source on salary payments. Unlike most other TDS returns that deal with one-time or periodic payments between parties, Form 24Q captures the ongoing monthly salary TDS across all employees of an organisation. It must be filed four times a year: by 31 July for the April–June quarter, by 31 October for the July–September quarter, by 31 January for the October–December quarter, and — most critically — by 31 May for the January–March quarter. The fourth-quarter return (Q4) has special significance because it includes Annexure II: the complete salary computation of every employee for the full financial year, which drives the generation of Form 16 (the TDS certificate that employees need for filing their income tax returns).

N D Savla & Associates, Chartered Accountants based in Mumbai, provides complete Form 24Q preparation and filing services for employers: computing TDS on salary for every employee each month (including under both the old and new tax regimes, with correct treatment of HRA exemption, standard deduction, Section 80C and other Chapter VI-A deductions, and perquisite valuation), depositing TDS by the 7th of every month using Challan 281, filing quarterly Form 24Q returns on the NSDL portal at tin-nsdl.com, preparing and issuing Form 16 to employees by 15 June, and handling revisions and corrections to previously filed Form 24Q returns through the TRACES portal at tdscpc.gov.in. Errors in Form 24Q directly affect employees' Form 26AS TDS credits and their ability to claim TDS refunds when filing their income tax returns. A correctly filed Form 24Q is therefore not just an employer compliance requirement — it is the foundation of every employee's TDS credit record for the year.

As part of the broader TDS framework covered in our TDS and Tax Liability in India guide, Form 24Q specifically addresses the employer's role as a deductor of TDS on salary income under Section 192. Salary TDS is unique among TDS provisions: the deductor (employer) is required to estimate the employee's total annual income at the beginning of the year, compute the projected tax liability, and spread the TDS evenly over the remaining months. This is unlike other TDS sections where the rate is fixed and applied to each payment. The quarterly Form 24Q captures this running TDS computation and creates the paper trail between employer payroll and the employee's Form 26AS.

What Is Form 24Q? — TDS Return for Salary Payments

Section 192 — TDS on Salary

Section 192 of the Income Tax Act, 1961 is the provision governing TDS on salary payments. It requires every person responsible for paying any income chargeable under the head "Salaries" to deduct income tax on the estimated income of the employee at the applicable average tax rate. Key characteristics of Section 192 TDS that distinguish it from other TDS sections:

Form 24Q vs Form 26Q vs Form 27Q — The TDS Return Family

There are four categories of TDS/TCS quarterly returns. Form 24Q is exclusively for salary TDS. Other types of income have their own returns:

An employer with both employees (salary payments) AND vendors/contractors (non-salary payments) must file BOTH Form 24Q (for employee TDS under Section 192) AND Form 26Q (for vendor TDS under Sections 194C, 194J, etc.) every quarter. These are separate returns with separate TAN-linked filings. For TDS on property transactions, see our TDS on Purchase of Property guide.

Who Must File Form 24Q?

Every person who is responsible for paying salary income and who deducts TDS under Section 192 must file Form 24Q. There is no threshold on the number of employees or the quantum of salary — if any TDS has been deducted from any employee's salary, Form 24Q must be filed. The categories of employers who must file Form 24Q:

• Private limited companies and public limited companies — all sizes

• Partnership firms and LLPs with salaried employees

• Proprietorships and individuals employing domestic servants or staff above the TDS threshold

• Government departments, PSUs, and autonomous bodies

• Educational institutions — schools, colleges, universities

• Trusts, NGOs, Section 8 companies (even if registered as charitable entities, salary TDS obligations apply)

• Foreign companies with a permanent establishment or branch in India

• Embassies and foreign diplomatic missions in India

A company or employer need NOT file Form 24Q for a quarter if no salary was paid in that quarter or if no TDS was required to be deducted (because all employees' income was below the basic exemption limit after all deductions). However, where TDS is deductible on even one employee's salary, Form 24Q must be filed for the quarter covering that employee.

Form 24Q Due Dates and TDS Deposit Schedule

Form 24Q must be filed quarterly. The filing deadlines and the related monthly TDS deposit due dates:

March salary TDS has a special rule: TDS deducted from March salary must be deposited by 30 April (not the 7th of the following month, which would be 7 April). This extra time allows employers to compute the exact annual liability for each employee in the Q4 Annexure II and true-up any shortfall or excess TDS. The annual Form 24Q (Q4) due date of 31 May is later than the other quarters' 30-day-after-quarter-end rule, specifically to accommodate the preparation of Annexure II.

What Form 24Q Contains — Annexure I and Annexure II

Form 24Q consists of the deductor's details (employer information) and two distinct Annexures that capture different levels of TDS information:

Annexure I — Quarterly TDS Details (All Four Quarters)

Annexure I is filed in every quarter (Q1, Q2, Q3, and Q4). It contains:

• Deductor (employer) details: Name, TAN, PAN, address, category of deductor (company / firm / government / individual / HUF, etc.)

• Challan details: For each monthly TDS deposit made during the quarter — the challan amount, BSR code (bank branch code), challan serial number, date of deposit, and PAN/TAN linked to the deposit

• Employee deductee details: For each employee from whose salary TDS was deducted — employee name, PAN, salary paid, TDS deducted, TDS deposited (linked to the challan above)

• Mode of payment: Whether the TDS was deposited through net banking, bank counter, or Government challan (for government deductors)

The Annexure I data is the foundation of the employee's Form 26AS TDS credit. Once Form 24Q is filed and processed, the TDS deducted from each employee's salary appears as a credit in that employee's Form 26AS under the employer's TAN.

Annexure II — Annual Salary Computation (Q4 Only)

Annexure II is filed ONLY in the Q4 (January–March quarter) Form 24Q. It is the most important part of Form 24Q because it contains the complete salary computation for every employee for the FULL financial year. Annexure II includes:

• Gross salary: All salary components — basic, HRA, special allowance, LTA, performance bonus, commission, and all other salary elements

• Exemptions under Section 10: HRA exemption (Section 10(13A)) for employees who claimed HRA exemption with rent receipts; LTA exemption (Section 10(5)); Children's education allowance (Section 10(14))

• Standard deduction: Rs. 50,000 under the old tax regime (Rs. 75,000 from AY 2025-26 under the new regime)

• Gross income under salary head: After Section 10 exemptions and standard deduction

• Deductions under Chapter VI-A (old tax regime only): Section 80C (PF, LIC, ELSS, PPF, home loan principal), 80CCD(1B) (NPS), 80D (health insurance), 80E (education loan interest), 80G (donations), and all other eligible deductions

• Net taxable income: Gross salary income minus Chapter VI-A deductions

• Tax liability: Computed at applicable slab rates (old or new regime as per employee's option)

• Surcharge and health & education cess (4%)

• Section 87A rebate (where applicable)

• TDS deducted: Total TDS deducted during the financial year (across all four quarters)

Annexure II is what generates Part B of Form 16. The Q4 Form 24Q feeds directly into the TRACES portal's Form 16 generation tool. An employer with errors in Annexure II will generate incorrect Form 16s, which will in turn cause TDS credit mismatches when employees file their income tax returns.

How TDS on Salary Is Computed — The Section 192 Calculation

Computing TDS on salary is more complex than other TDS deductions because it requires estimating the employee's annual income and tax liability, accounting for the regime chosen, and spreading the TDS over the months. The computation at the start of the year (or on joining):

• Step 1: Estimate the employee's annual gross salary for the financial year (including all components: basic, HRA, allowances, expected bonus, etc.)

• Step 2: Deduct exemptions under Section 10 (HRA, LTA) based on declarations/proofs provided by the employee

• Step 3: Deduct standard deduction (Rs. 50,000 under old regime; Rs. 75,000 under new regime from AY 2025-26)

• Step 4: Arrive at Gross Income under the Salary head

• Step 5: Add income from other heads declared by the employee (house property income, interest income, etc.) if the employee has provided a declaration under Section 192(2B)

• Step 6: Deduct Chapter VI-A deductions (ONLY in old tax regime: 80C, 80D, 80CCD(1B), etc.) based on investment declarations provided by the employee

• Step 7: Arrive at Net Taxable Income

• Step 8: Compute tax at the applicable slab rates (old or new regime per employee's option)

• Step 9: Add 4% health & education cess

• Step 10: Deduct Section 87A rebate (Rs. 12,500 for old regime if income = Rs. 5 lakh; Rs. 25,000 for new regime if income = Rs. 7 lakh)

• Step 11: Arrive at Annual TDS to be deducted

• Step 12: Divide annual TDS by the number of remaining months in the financial year — deduct this amount from monthly salary

Old Tax Regime vs New Tax Regime — Impact on TDS

From FY 2023-24, the new tax regime is the DEFAULT. An employee who does not specifically opt for the old regime is automatically assessed under the new regime. The employer must compute TDS accordingly. The implications:

The employee must inform the employer of their regime choice at the start of the financial year. If no declaration is given, the employer deducts TDS under the new (default) regime. If an employee changes their regime preference mid-year, the employer adjusts TDS computation from that point forward, ensuring total annual TDS matches the liability under the chosen regime.

TDS Re-computation During the Year

The annual TDS computation is not static — it must be re-computed and adjusted whenever:

• An employee joins mid-year (the employer computes from the joining month for the remaining months, and adds income/TDS from the previous employer if declared)

• An employee's salary changes (increments, bonuses, or salary restructuring)

• Investment proofs are submitted or updated (particularly before the year-end February–March finalisation)

• The employee revises their regime choice (subject to the rules on mid-year regime change)

• Additional income declarations are received from the employee (e.g., income from house property, other sources)

TDS Deposit — Challan 281 (ITNS 281)

TDS deducted from employee salaries must be deposited with the government using Challan 281 (also called ITNS 281 — Income Tax New Series 281) on the income tax portal at incometax.gov.in or through bank branches. Key requirements:

• Challan 281 is specifically for TDS/TCS deposits — do not use Challan 280 (which is for advance tax / self-assessment tax) for TDS deposits

• The TAN of the employer (not PAN) must be correctly mentioned on Challan 281

• Nature of payment: Select "TDS on Salary" under Section 192 (code 0192)

• Monthly deposit: TDS deducted from salaries must be deposited by the 7th of the following month (e.g., April TDS by 7 May), except March salary TDS which is due by 30 April

• Challan details are critical for Form 24Q: Each challan's BSR code, serial number, and date must be correctly entered in Form 24Q Annexure I. Incorrect challan details are one of the most common causes of Form 24Q rejection

• Challan 281 receipt: Retain all Challan 281 payment receipts; they are required for reconciliation when filing Form 24Q and for responding to TDS mismatch notices

How to File Form 24Q — Step-by-Step Process

1. Step 1 — Maintain Monthly Payroll and TDS Records
2. Step 2 — Deposit TDS Monthly by the 7th Using Challan 281
3. Step 3 — Prepare Form 24Q Using RPU / TDS Return Software
4. Step 4 — Validate with FVU (File Validation Utility)
5. Step 5 — Upload the Validated Return on NSDL TIN Portal
6. Step 6 — Download and Issue Form 16 to Employees by 15 June

Form 16 — TDS Certificate Issued to Employees

Form 16 is the most widely known TDS certificate in India — every salaried taxpayer requires it to file their income tax return. Form 16 is issued by the employer to each employee from whom TDS was deducted during the financial year. It has two parts:

Form 16 Part A — Generated from TRACES

Part A of Form 16 is generated by the TRACES portal at tdscpc.gov.in based on the Q4 Form 24Q data. It contains:

• Name and TAN of the employer (deductor)

• Name and PAN of the employee (deductee)

• Summary of TDS deducted and deposited for each quarter of the financial year

• Assessment year to which Form 16 relates

• Unique TDS certificate number

Part A is digitally signed by TRACES and cannot be manually prepared by the employer. The employer downloads Part A from TRACES after the Q4 Form 24Q is processed, and it is automatically consistent with the employee's Form 26AS TDS credits.

Form 16 Part B — Prepared by Employer

Part B of Form 16 is the detailed salary computation for the employee for the financial year. It is prepared by the employer (not downloaded from TRACES) and contains the information from Annexure II of Q4 Form 24Q:

• Gross salary and all salary components

• Section 10 exemptions (HRA, LTA, etc.)

• Standard deduction

• Income under the head "Salaries"

• Chapter VI-A deductions (old regime only)

• Net taxable income

• Tax computation (slab rates, cess, rebate)

• Total TDS deducted for the year

Employees use Form 16 (Parts A and B together) to fill in Schedule S (Salary) and Schedule TDS in their income tax return. Employers should issue complete, accurate Form 16s by 15 June. Late or incorrect Form 16s cause significant inconvenience to employees who cannot file their ITRs until they receive Form 16.

Late Filing Fees and Penalties for Form 24Q

Section 234E — Rs. 200 Per Day Late Fee

Section 234E imposes a mandatory late filing fee of Rs. 200 per day for each day of delay in filing Form 24Q after the due date. The fee is calculated from the day after the due date until the actual date of filing. The fee is capped at the total TDS amount for the quarter (cannot exceed the aggregate TDS).

Section 271H — Penalty for Incorrect or Non-Filed Returns

Section 271H provides for a penalty of Rs. 10,000 to Rs. 1,00,000 for: non-filing of TDS return (Form 24Q) within 1 year from the due date; or filing a TDS return with incorrect information (incorrect PAN, incorrect TDS amounts, incorrect challan details). The AO has discretion in imposing this penalty. Section 271H is in addition to Section 234E — both can apply simultaneously.

Section 201(1) and 201(1A) — Assessee in Default

An employer who fails to deduct TDS on salary (or deducts but fails to deposit) becomes an "assessee in default" under Section 201(1). As a result: the employer is personally liable to pay the undeducted/undeposited TDS; and interest at 1%/1.5% per month applies (1% from the date TDS should have been deducted to the date of actual deduction; 1.5% from date of deduction to date of deposit). This applies independently of the Section 234E fee on late Form 24Q filing.

Common Errors in Form 24Q and How to Correct Them

Errors That Require a Revised Return

How to File Revised (Corrected) Form 24Q

Corrections to filed Form 24Q are made through the TRACES portal at tdscpc.gov.in. The correction process:

• Log in to TRACES using TAN credentials

• Request a consolidated TDS statement for the relevant quarter (this provides the current data in the filed return)

• Make corrections using the NSDL correction RPU or through the online correction facility on TRACES

• Submit the corrected return on TRACES

• Track the correction status on TRACES

Important: Filing a corrected Form 24Q does not reverse the Section 234E late fee already incurred on the original filing. The correction only updates the data; it does not undo past penalties.

Form 24Q in Indian Tax History — Historical Background

Origins of Salary TDS

TDS on salary (Section 192 equivalent) has been part of Indian income tax law since the Income Tax Act, 1961. The principle that employers should withhold tax from employees' salaries — rather than leaving employees to self-compute and pay their tax annually — mirrors the PAYE (Pay As You Earn) system in the United Kingdom and similar withholding tax systems globally. India's salary TDS mechanism predates the formal Form 24Q system: in the pre-digitisation era, employers filed physical TDS certificates and returns with the Income Tax Department.

Introduction of Quarterly Form 24Q — Electronic Filing

The electronic quarterly TDS return system, with Form 24Q as the standard employer return, was introduced in the early 2000s as part of the digitalisation of India's tax administration. The NSDL portal at tin-nsdl.com became the centralised platform for TDS return filing. The introduction of Annexure II (the annual salary computation in Q4) and its linking to TRACES-generated Form 16 created the closed loop between employer payroll, TDS return, Form 26AS employee credit, and employee ITR filing.

New Tax Regime Impact on Form 24Q from FY 2023-24

The introduction of the new tax regime as the DEFAULT from FY 2023-24 (AY 2024-25) significantly changed the Form 24Q computation. Employers must now track which regime each employee has chosen, compute TDS under the appropriate regime, and capture the regime information in Annexure II. CBDT has issued detailed circulars on how employers should handle the regime choice declaration, mid-year changes, and the computation of TDS under both regimes.

Why Choose N D Savla & Associates for Form 24Q Compliance?

Form 24Q compliance involves monthly TDS computation, monthly deposit, quarterly filing, year-end Annexure II, and annual Form 16 issuance — a recurring compliance cycle that demands precision and timeliness. N D Savla & Associates provides end-to-end payroll TDS management for employers.

Monthly TDS Computation Under Both Regimes

We compute TDS for every employee every month under the regime they have chosen (old or new), correctly applying Section 10 exemptions (HRA, LTA), standard deduction, Chapter VI-A deductions (for old regime employees), and the Section 87A rebate. Mid-year salary changes, new joiners, and resignees are handled with correct pro-rated TDS computation. Our computation methodology aligns with CBDT's circulars on TDS on salary and the applicable tax regime guidelines.

Quarterly Form 24Q Filing on Time

We file Form 24Q for all four quarters before the respective due dates (31 July, 31 October, 31 January, 31 May), ensuring no Section 234E late fee is ever incurred. The Q4 Form 24Q with complete Annexure II is filed by 31 May, enabling timely Form 16 issuance. Where an employer engages our services after missing a deadline, we handle the belated filing with correct Section 234E computation and deposit.

Form 16 Preparation and Issuance by 15 June

We download Form 16 Part A from TRACES at tdscpc.gov.in for all employees and prepare Form 16 Part B with the complete salary computation. All Form 16s are issued to employees by 15 June — in time for employees to file their ITRs. Employees who want to apply for a Lower TDS Certificate under Section 197 to reduce the employer's TDS deduction are assisted with the Form 13 TRACES application.

TDS Return Corrections and Employee PAN Mismatches

We handle all Form 24Q corrections through TRACES: PAN corrections for employees whose PAN was incorrectly entered, challan corrections, TDS amount revisions, and Annexure II corrections where annual salary computations need updating. We track each employee's Form 26AS TDS credit after filing to verify that all credits have been correctly posted.

Frequently Asked Questions About Form 24Q