Employer TDS on Salary: Form 24Q Quarterly Filing Deadlines, TRACES Portal & Form 16 Issuance Guide (FY 2026-27)

Overview: A beginner guide to employer TDS compliance in India. Understand Form 24Q quarterly return deadlines, Annexure I and II, TRACES portal processing, Section 234E late fees, and Form 16 generation.

The Employer Critical Role in Tax Deducted at Source (TDS)

Under Section 192 of the Income Tax Act, employers are legally entrusted with a crucial responsibility: estimating an employee's total annual income tax liability, deducting that tax in monthly installments (TDS), and depositing it with the government.

However, deducting tax from monthly paychecks is only step one. Employers must also report every rupee deducted by filing quarterly TDS returns via Form 24Q and issuing Form 16 certificates to employees.

Missing a filing deadline or submitting mismatched PAN data leads to automated penalty notices from the Income Tax Department. Here is a clear, step-by-step breakdown of how employers can manage Form 24Q filings and Form 16 issuance smoothly throughout the financial year.

What is Form 24Q?

Form 24Q is the quarterly tax return submitted by employers to report all TDS deducted from salary payments made to resident Indian employees.

It consists of two main components:

1. Annexure I: Submitted in all four quarters (Q1, Q2, Q3, and Q4). It contains deductee-wise records, including employee PAN, monthly salary paid, TDS deducted, and the corresponding tax challan numbers (BSR codes and deposit dates).

2. Annexure II: Submitted only in the final quarter (Q4). It provides a comprehensive annual salary breakdown for every employee, including total gross earnings, allowances, deductions under Chapter VI-A (Section 80C, 80D, etc.), chosen tax regime, and final tax computed.

Form 24Q Quarterly Filing Deadlines for FY 2026-27

Employers must deposit monthly TDS by the 7th of the following month (and by April 30th for March deductions). Following the monthly deposits, Form 24Q quarterly returns must be filed on or before these statutory deadlines:

Consequences of Delayed Filing or Incorrect Returns

Filing late or submitting incorrect PAN numbers triggers automated statutory penalties under the Income Tax Act:

• Section 234E (Late Filing Fee): A mandatory late fee of Rs. 200 per day for every day the return remains unfiled after the due date. The total late fee cannot exceed the total TDS amount for that quarter.

• Section 271H (Penalty for Default): A penalty ranging from a minimum of Rs. 10,000 up to Rs. 1,00,000 for failing to file within one year of the due date or for providing incorrect PAN/challan information.

• Section 201(1A) (Interest on Delay):

  • 1% per month for delay in deducting TDS from salary.

  • 1.5% per month for delay in depositing deducted TDS to the government account.

Generating Form 16 via the TRACES Portal

Form 16 is the annual certificate of tax deduction issued by the employer to the employee. It is divided into two distinct parts:

Part A: Government-Validated Tax Certificate

• Downloaded directly from the TRACES portal (TDS Reconciliation Analysis and Correction Enabling System).

• Contains the employer TAN and PAN, employee PAN, quarterly TDS summary, and government Challan Identification Numbers (CIN).

• Validated with a unique TRACES digital signature.

Part B: Detailed Salary Breakup and Computation

• Prepared by the employer or generated directly via payroll software.

• Contains detailed salary components (Basic, HRA, LTA, allowances), exemptions claimed, chosen tax regime (Old vs New), standard deduction of Rs. 75,000, and net tax computed.

Statutory Deadline for Form 16:

Under Section 203, employers must issue Form 16 (combining Part A and Part B) to all salaried employees on or before June 15 following the close of the financial year.

Step-by-Step TDS Compliance Checklist for Employers

1. Collect tax regime declarations (Form 12BB) from all employees at the start of the financial year.

2. Deduct accurate TDS every month on salary disbursements.

3. Deposit monthly TDS before the 7th of every succeeding month using Challan ITNS 281.

4. Prepare and validate quarterly Form 24Q returns using NSDL File Validation Utility (FVU).

5. Submit validated returns on the Income Tax e-Filing portal before the quarterly deadline.

6. Download consolidated Form 16 Part A files from TRACES in June and distribute signed certificates to employees.

Conclusion

TDS compliance is an ongoing, year-round responsibility that demands strict adherence to monthly deposit cycles and quarterly filing cut-offs. Keeping accurate employee tax declarations and error-free challan mapping ensures a frictionless tax filing experience for both the company and its workforce.

Using an integrated payroll platform like PrimeHR automates the entire TDS lifecycle: calculating monthly deductions across Old and New tax regimes, auto-generating FVU-validated Form 24Q files, and producing digitally signed Form 16 certificates in bulk with zero manual rework.