TDS on Salary: Form 16, 24Q and the Employer's Deadlines
Employers must deduct TDS on salary, file quarterly Form 24Q returns, and issue Form 16 annually. Here are the deadlines and what each document covers.
Employers deducting TDS on salary must deposit it monthly, file Form 24Q quarterly, and issue Form 16 to every employee annually - missing any of these deadlines creates interest, penalty, or employee tax-filing problems.
Key facts at a glance
- TDS on salary is deducted monthly based on the employee's estimated annual tax liability under their chosen tax regime.
- Form 24Q is the quarterly TDS return covering salary payments, filed with the Income Tax Department.
- Form 16 is the annual TDS certificate issued to each employee, generally due by 15 June following the end of the financial year.
- TDS deducted must be deposited with the government, typically by the 7th of the following month (with a different deadline for March).
- Late deposit attracts interest, and late filing of Form 24Q attracts a late filing fee under the Income Tax Act.
- Employees choose between the old and new tax regime, which changes how much TDS the employer must deduct each month.
The three moving parts of salary TDS compliance
Employers running payroll in India are simultaneously responsible for three distinct but linked obligations:
- Deducting and depositing TDS every month based on projected annual salary.
- Filing Form 24Q every quarter to report what was deducted.
- Issuing Form 16 once a year to each employee as their consolidated TDS certificate.
Getting any one of these wrong creates downstream problems - for the employer in the form of interest and penalties, and for the employee in the form of mismatched tax credit when they file their own return.
Monthly TDS deduction and deposit
Each month, the employer estimates the employee's total annual taxable salary based on their pay structure, declared investments, and chosen tax regime, then deducts a proportionate share of the estimated annual tax as TDS from that month's salary. The deducted amount must be deposited with the government, generally by the 7th of the following month, except for the month of March where the deadline extends into the following financial year.
Form 24Q: the quarterly return
| Quarter | Period covered | Typical filing deadline |
|---|---|---|
| Q1 | April - June | 31 July |
| Q2 | July - September | 31 October |
| Q3 | October - December | 31 January |
| Q4 | January - March | 31 May |
Form 24Q reports employee-wise salary paid and TDS deducted for the quarter. The Q4 filing is particularly important because it consolidates the full year's figures and is the basis for generating each employee's Form 16.
Form 16: the annual certificate
Form 16 has two parts. Part A is generated from the TDS return data filed via Form 24Q and confirms the tax deducted and deposited quarter by quarter. Part B is a detailed annexure showing the full salary breakup, allowances, deductions claimed, and the final tax computation for the year. Employers are generally expected to issue Form 16 to every employee from whose salary TDS was deducted by 15 June following the close of the financial year, giving employees enough time to file their income tax return.
Consequences of missing deadlines
- Late TDS deposit: interest is charged from the date the deduction was due to the date it was actually deposited.
- Late Form 24Q filing: a late filing fee accrues for each day of delay, in addition to potential interest.
- Late or incorrect Form 16: employees may face mismatches between their Form 26AS/AIS and their own tax return, causing notices or delayed refunds, and can hold the employer responsible.
Practical steps to stay on schedule
- Reconcile monthly TDS deductions against actual deposits before each quarterly filing.
- Collect employee investment declarations and regime choice early in the financial year, not at year-end.
- File Form 24Q well before the deadline to leave room for correction filings if errors are found.
- Cross-check Form 16 figures against the Q4 Form 24Q data before distribution.
If you are not sure whether your payroll TDS process is fully compliant, ComplianceCheck's statutory compliance assessment gives you a clear picture in a few minutes.
Sources
- Income Tax Department - incometax.gov.in
- TRACES portal (TDS Reconciliation Analysis and Correction Enabling System), linked via incometax.gov.in
This guide is general information, not legal advice. Requirements vary by state, sector and headcount - confirm specifics with a compliance professional or the relevant authority.
Frequently Asked Questions
- What is TDS on salary?
- TDS on salary is the tax an employer deducts at source from an employee's salary each month, based on the employee's estimated annual income and applicable tax slab, and deposits with the government on the employee's behalf.
- What is Form 24Q?
- Form 24Q is the quarterly TDS return an employer must file with the Income Tax Department, reporting the salary TDS deducted and deposited for all employees during that quarter.
- What is Form 16 and when must it be issued?
- Form 16 is the annual TDS certificate an employer issues to each employee after the financial year ends, summarizing the salary paid and tax deducted across the year; it is generally required to be issued by 15 June following the financial year.
- What happens if an employer deposits TDS late?
- Late deposit of TDS attracts interest under the Income Tax Act, and late filing of the TDS return attracts a late filing fee, both of which are the employer's liability even if the employee's own tax position is unaffected.
- Does every employer have to deduct TDS on salary?
- An employer must deduct TDS whenever an employee's estimated annual taxable income exceeds the basic exemption threshold under the tax regime the employee has opted for; below that threshold no TDS deduction is required.
- What is the difference between Form 16 and Form 16A?
- Form 16 is specifically the TDS certificate for salary income, while Form 16A covers TDS deducted on non-salary payments such as professional fees, rent, or contractor payments.
- Can an employee choose between the old and new tax regime for TDS purposes?
- Yes, an employee can generally choose which tax regime the employer should use for computing salary TDS at the start of the year, and this affects the deduction amount calculated each month.
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