What TDS compliances apply to Private Limited Companies with key sections and common mistakes?

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Private Limited Companies in India must comply with Tax Deducted at Source (TDS) regulations under the Income Tax Act. TDS is applicable when the company makes certain payments such as salaries, contractor fees, professional fees, rent, or interest. The company is responsible for deducting tax at the specified rate and depositing it with the government within the prescribed timelines.

Key TDS provisions for Private Limited Companies include Section 192 for salaries, Section 194A for interest payments, Section 194C for contractor payments, Section 194J for professional fees, and Section 194I for rent. Each section specifies the rate at which tax must be deducted, the due date for deposit, and the filing of quarterly TDS returns using forms like 24Q or 26Q depending on the nature of the payment.

Common mistakes companies make include late deduction or deposit of TDS, incorrect quoting of TAN or PAN, wrong TDS rates, missing quarterly return filing, and failing to issue Form 16 or Form 16A to recipients. For example, if a company pays ₹50,000 to a contractor and fails to deduct 1% TDS under Section 194C, it may attract interest and penalties.

To stay compliant, Private Limited Companies should maintain proper records of all payments subject to TDS, verify PAN details of recipients, reconcile TDS deposits with Form 26AS, and file quarterly TDS returns on time. Using accounting software or professional support can help avoid errors and ensure smooth compliance.

❓ What TDS sections apply to salary payments?
👉 Section 192 applies to salaries paid to employees, with tax deducted based on applicable income tax slabs.

❓ How often should TDS be deposited?
👉 TDS must be deposited monthly with the government, and quarterly returns must be filed.

❓ What are the penalties for late TDS filing?
👉 Late deduction or deposit attracts interest under Section 201 and penalties under Section 271C, which can accumulate quickly if ignored.

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