TL;DR
September and October 2026 are important months for TDS compliance because deductors need to deposit TDS within the prescribed timelines and prepare for the quarterly TDS statement for July–September 2026. For regular monthly TDS, tax deducted during August is generally deposited by 7 September, while TDS deducted during September is generally payable by 7 October. The Q2 TDS statements covering July–September 2026 are due by 31 October 2026. Under the Income Tax Act, 2025, new forms such as Form 138 for salary TDS and Form 140 for resident non-salary TDS apply for Tax Year 2026–27.
Introduction
TDS compliance is an important part of the monthly and quarterly tax obligations of businesses, employers, professionals and other deductors.
September and October 2026 are particularly important because businesses need to manage regular monthly TDS payments while also preparing the July–September 2026 quarterly TDS statement.
The compliance process has also changed in 2026 because the Income Tax Act, 2025 applies to transactions governed by the new tax-year framework from 1 April 2026. The Income Tax Department has introduced revised forms and section numbering for Tax Year 2026–27.
For businesses, this means TDS compliance should not be limited to simply depositing tax on time. Deductors should also verify PAN details, deduction sections, amounts, challans, deductee information and quarterly reporting before filing the statement.
A small mistake in TDS data can result in interest, late filing consequences, incorrect Form 16A or Form 16 information, mismatches in the deductee’s tax records and unnecessary compliance notices.
TDS Due Dates for September and October 2026
Understanding the monthly and quarterly deadlines is the first step toward maintaining proper TDS compliance.
TDS Payment Due Date in September 2026
TDS deducted during August 2026 is generally required to be deposited with the government by 7 September 2026.
The general rule continues to require monthly TDS deposits by the 7th of the following month, subject to specific exceptions. The Income Tax Department has confirmed that the Income Tax Rules, 2026 retain the same general payment timeline under the new framework.
TDS Payment Due Date in October 2026
TDS deducted during September 2026 is generally required to be deposited by 7 October 2026.
Businesses should reconcile the TDS payable ledger with the actual deduction records before making the payment.
Q2 TDS Return Due Date
The second quarter covers:
July 2026 to September 2026
The quarterly TDS statements for this period are generally due by:
31 October 2026
For Tax Year 2026–27, the Income Tax Department has introduced new quarterly forms corresponding to the earlier TDS statement framework.
Form 138 covers salary TDS reporting, while Form 140 covers TDS on non-salary payments to residents. Form 144 applies to TDS on payments other than salary made to non-residents.
September–October 2026 TDS Compliance Calendar
| Compliance | Period Covered | Due Date |
|---|---|---|
| TDS payment | August 2026 deductions | 7 September 2026 |
| TDS payment | September 2026 deductions | 7 October 2026 |
| Q2 TDS statement | July–September 2026 | 31 October 2026 |
| Form 138 | Salary TDS, Q2 | 31 October 2026 |
| Form 140 | Resident non-salary TDS, Q2 | 31 October 2026 |
| Form 144 | Non-resident non-salary TDS, Q2 | 31 October 2026 |
The exact compliance obligation depends on the nature of payment and the deductor. Special challan-cum-statement provisions can have different timelines.
What Has Changed for TDS in 2026?
The Income Tax Act, 2025 introduced a new framework for Tax Year 2026–27.
This means businesses need to understand whether a transaction falls under the old Income Tax Act, 1961 or the new Income Tax Act, 2025.
How to Determine the Applicable Act
The Income Tax Department states that the applicable Act during the transition depends on the earlier of the event of credit or payment.
If that event occurred on or before 31 March 2026, the old Income Tax Act, 1961 generally applies.
If the earlier event occurred on or after 1 April 2026, the Income Tax Act, 2025 framework applies.
Therefore, businesses should not simply change every TDS section in their accounting software without considering the transaction date.
New TDS Forms Under the Income Tax Act, 2025
The new Act has reorganized the TDS reporting framework.
Form 138
Form 138 is the new quarterly statement for salary TDS, replacing the earlier Form 24Q framework for applicable Tax Year 2026–27 reporting.
The Q2 statement covering July–September 2026 is due by 31 October 2026.
Form 140
Form 140 is the quarterly TDS statement for non-salary payments to residents.
It covers payments such as applicable professional fees, commission, brokerage, rent and similar payments where TDS is required.
The Q2 Form 140 for July–September 2026 is due by 31 October 2026.
Form 144
Form 144 is applicable to TDS on payments other than salary made to non-residents under the new framework.
The Q2 statement for July–September 2026 is also due by 31 October 2026.
Monthly TDS Compliance: What Businesses Should Check
Monthly TDS compliance should ideally be completed through a systematic process rather than waiting until the quarterly return.
Businesses should verify:
- Payments subject to TDS
- Applicable TDS section
- Applicable rate
- Deductee PAN
- Date of credit
- Date of payment
- Amount credited or paid
- TDS amount
- TDS payable ledger
- Challan details
- Deductee classification
- Lower or nil deduction certificates, where applicable
- TDS exemptions or thresholds
This process helps reduce errors before the quarterly statement is prepared.
Common TDS Errors in September–October 2026
1. Using the Wrong TDS Section
One of the most common mistakes is applying an incorrect section to a payment.
For example, professional fees, contractor payments, commission, rent, interest and payments to non-residents may have different TDS provisions.
Under the new Act, section numbering has also changed, making it particularly important to update accounting and payroll systems correctly.
2. Applying the Wrong TDS Rate
A business may identify that TDS is applicable but still deduct the wrong amount because the rate was incorrectly configured.
Businesses should verify the applicable rate based on:
- Nature of payment
- Residential status
- PAN availability
- Applicable threshold
- Certificate for lower deduction, if any
- Specific statutory provisions
3. Incorrect PAN Details
An incorrect PAN can create a mismatch between the TDS statement and the deductee’s tax records.
Before filing the quarterly return, PAN details should be validated carefully.
4. TDS Deducted but Not Deposited on Time
Deducting TDS from a payment does not complete the compliance process.
The amount must also be deposited within the applicable deadline.
For regular monthly deductions, the general due date is the 7th of the following month.
5. Wrong Deduction Date
TDS obligations can depend on the earlier of credit or payment, depending on the applicable provision.
Therefore, businesses should not rely solely on the date shown on a bank statement.
The accounting entry and actual payment should both be reviewed.
6. Incorrect Challan Details
A TDS payment may be made on time but still create a problem if the challan contains incorrect information.
Businesses should reconcile:
- Challan amount
- Date of payment
- BSR/challan reference
- TAN
- Assessment/tax year
- Major/minor head where applicable
- Relevant section details
7. Missing Deductees From the Quarterly Statement
Sometimes TDS is correctly deducted and deposited but one or more deductees are accidentally omitted from the quarterly statement.
This can result in a mismatch between the amount deposited and the amount reported.
8. Duplicate Reporting
Duplicate entries can cause the total TDS reported in the quarterly statement to exceed the actual amount deducted.
This can happen when accounting data is imported more than once or when manual and automated entries overlap.
9. Wrong Salary Details
Employers should carefully reconcile salary records before filing the salary TDS statement.
Important information includes:
- Employee PAN
- Salary paid
- TDS deducted
- Taxable salary
- Exemptions and deductions considered
- Employment period
- Tax regime-related information where applicable
10. Ignoring Non-Resident Payments
Payments to non-residents require additional attention because taxability, applicable provisions, treaty considerations and documentation can differ.
Businesses making such payments should separately review the applicable TDS requirements and reporting form.
TDS Reconciliation Before Filing the Q2 Return
Before filing the July–September 2026 quarterly statement, businesses should prepare a complete reconciliation.
A practical reconciliation can be structured as:
Books of Accounts → TDS Payable Ledger → TDS Challans → Deductee Register → Quarterly TDS Statement
The following amounts should be compared:
| Particular | Books | Challan | TDS Statement | Difference |
|---|---|---|---|---|
| TDS on salary | ₹X | ₹X | ₹X | ₹X |
| TDS on contractors | ₹X | ₹X | ₹X | ₹X |
| TDS on professional fees | ₹X | ₹X | ₹X | ₹X |
| TDS on rent | ₹X | ₹X | ₹X | ₹X |
| TDS on interest | ₹X | ₹X | ₹X | ₹X |
| TDS on other payments | ₹X | ₹X | ₹X | ₹X |
The actual figures should be populated from the business’s accounting records.
How to Avoid TDS Return Mismatches
A good TDS compliance process should include three separate checks.
Check 1: Deduction Reconciliation
Compare the TDS deducted according to the books with the actual TDS payable.
Check 2: Payment Reconciliation
Compare the TDS payable with challans deposited with the government.
Check 3: Return Reconciliation
Compare the TDS statement with the books and challans before submitting the quarterly return.
This three-step process can identify discrepancies before they become filing problems.
What Happens If TDS Is Deposited Late?
Late TDS payment can result in interest consequences.
The Income Tax Department confirms that delayed deposit of deducted TDS can attract interest, with the applicable framework depending on the relevant Act and transaction.
For example, the Department’s transition guidance states that where TDS deducted under the old framework was deposited after the prescribed due date, interest could apply at 1.5% per month or part of a month from the date of deduction until actual payment.
Businesses should therefore calculate and pay TDS within the applicable timeline rather than waiting until the quarterly return deadline.
What Happens If a TDS Return Is Filed Late?
Late filing of a TDS statement can result in statutory consequences, including late filing fees and other consequences depending on the circumstances.
More importantly, delayed or inaccurate reporting can affect the deductee’s tax records.
This is why businesses should prepare the quarterly statement well before 31 October 2026 rather than attempting to compile the entire quarter’s data at the last minute.
TDS Certificates and Reconciliation
TDS certificates should also be reviewed after the relevant statement is processed.
For non-salary TDS, Form 16A provides details of TDS deducted and deposited and is issued quarterly by the deductor to the deductee under the applicable framework.
Businesses should ensure that:
- Deductee details are correct
- TDS amount matches accounting records
- TDS deposited matches the statement
- Certificates contain correct information
- Corrections are made where required
Special Attention for the 2026 Transition
The transition from the Income Tax Act, 1961 to the Income Tax Act, 2025 makes 2026 different from a normal compliance year.
Businesses may have records under both frameworks.
For example, old-period TDS corrections relating to periods governed by the 1961 Act continue to be filed under the old framework even after 1 April 2026. The Income Tax Department has specifically clarified that corrections to pre-1 April 2026 TDS statements continue under the old Act framework.
Therefore, businesses should maintain separate clarity between:
Old Act transactions and returns
and
Tax Year 2026–27 transactions and returns under the new Act
TDS Compliance Checklist for September–October 2026
Before completing September and October TDS compliance, businesses should verify:
- August 2026 TDS deposited by 7 September
- September 2026 TDS deposited by 7 October
- Q2 TDS data compiled
- July–September deduction records reconciled
- PAN details verified
- Correct TDS sections checked
- TDS rates verified
- Challans reconciled
- Deductee details checked
- Salary records reconciled
- Non-resident payments separately reviewed
- Lower/nil deduction certificates checked
- Q2 TDS statement prepared
- Form 138 checked for salary TDS, where applicable
- Form 140 checked for resident non-salary TDS, where applicable
- Form 144 checked for applicable non-resident TDS
- Quarterly statement filed by 31 October 2026
- TDS certificates reviewed after processing
- Old Act and new Act transactions separately identified
- Any correction requirements identified
How Businesses Can Make TDS Compliance Easier
TDS compliance becomes much easier when businesses maintain a monthly compliance system.
Instead of waiting until the quarterly return deadline, businesses can maintain a monthly TDS working file containing:
- Vendor-wise TDS
- Employee-wise TDS
- Payment date
- Credit date
- Applicable section
- TDS rate
- TDS deducted
- Challan reference
- Payment date
- Return status
- Correction status
At the end of the quarter, this information can be consolidated and reconciled with the accounting records.
Conclusion
TDS compliance during September and October 2026 requires attention to both monthly TDS payments and quarterly reporting.
TDS deducted during August 2026 is generally payable by 7 September, while September 2026 deductions are generally payable by 7 October. The Q2 TDS statements covering July–September 2026 are due by 31 October 2026. Under the new Income Tax Act, 2025 framework, businesses should also become familiar with the revised TDS forms, including Form 138, Form 140 and Form 144.
The most important step is not simply meeting the deadline but ensuring that the books, TDS deductions, challans and quarterly statement all reconcile.
Businesses should also be careful during the 2026 transition because transactions governed by the old Income Tax Act, 1961 and those governed by the Income Tax Act, 2025 may follow different section references and reporting frameworks.
A structured monthly reconciliation can help businesses reduce TDS mismatches, avoid unnecessary interest and compliance issues, and maintain accurate tax records throughout the year.
Frequently Asked Questions
1. What is the TDS payment due date in September 2026?
TDS deducted during August 2026 is generally required to be deposited by 7 September 2026, subject to applicable exceptions.
2. What is the TDS payment due date in October 2026?
TDS deducted during September 2026 is generally required to be deposited by 7 October 2026.
3. What is the TDS return due date for July to September 2026?
The Q2 TDS statement covering July–September 2026 is generally due by 31 October 2026.
4. What is Form 138 under the Income Tax Act, 2025?
Form 138 is the quarterly TDS statement applicable to salary TDS under the new framework. The Q2 statement for July–September 2026 is due by 31 October 2026.
5. What is Form 140?
Form 140 is the quarterly TDS statement for non-salary payments made to resident deductees where TDS is applicable.
6. What is Form 144?
Form 144 is the quarterly statement for TDS on payments other than salary made to non-residents under the Income Tax Act, 2025 framework.
7. What are the most common TDS compliance errors?
Common errors include incorrect PAN, wrong TDS section, incorrect rate, late deposit, incorrect challan details, duplicate reporting, missing deductees and differences between books and the quarterly statement.
8. Does late TDS payment attract interest?
Yes. Delayed deposit of deducted TDS can attract interest under the applicable provisions. The exact consequence depends on the applicable Act and nature of the transaction.
9. Does the Income Tax Act, 2025 apply to all TDS transactions from September 2026?
Transactions governed by the new tax-year framework from 1 April 2026 generally fall under the Income Tax Act, 2025. However, older transactions and corrections relating to periods governed by the Income Tax Act, 1961 continue under the old framework.
10. How can businesses avoid TDS return mismatches?
Businesses should reconcile the TDS payable ledger with deduction records, government challans and the quarterly TDS statement before filing. PAN, section, rate, deductee and payment details should also be verified.
Blog By : CA Junaid Khan
Written by CA Junaid Ahmed Khan, Junaid Khan & Co., Bhopal.
