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July 9, 2026
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BySteffy A
How to Make TDS Payment Online? Step-by-Step Process
Introduction
Understanding how to make TDS payment online has become important after the implementation of the Income Tax Act, 2025 from 1st April 2026. Earlier, TDS compliance was governed under the Income Tax Act, 1961 using old return forms and procedures. However, after the applicability of the Income Tax Act, 2025, several TDS/TCS forms, compliance references, and reporting formats have been renumbered and updated.
Tax Deducted at Source (TDS) continues to remain a mandatory compliance requirement for businesses, employers, professionals, and other deductors making specified payments such as salary, contractor payments, professional fees, rent, commission, and brokerage. Every deductor is required to deduct tax at the applicable rate and deposit it with the government within the prescribed due date.
Today, most businesses prefer TDS payment online because the process is faster, more secure, and easier to reconcile with TDS returns and challan records. Understanding how to make TDS payment online correctly helps businesses avoid interest liability, penalties, notices, challan mismatches, and return filing issues.
This guide explains how to pay TDS online, how to calculate TDS on payment, how to pay default TDS payment, refund procedures, and important compliance requirements under the Income Tax Act, 2025.
Disclaimer: Under the Income Tax Act, 2025, certain TDS/TCS forms have been renumbered.
Who is Required to Make TDS Payment?
The responsibility to deduct and deposit TDS applies to:
- Companies
- Employers deducting TDS on salary
- Professionals liable under tax audit
- Partnership firms and LLPs
- Individuals and HUFs covered under audit provisions
Before understanding how to make TDS payment online, businesses should know that TDS is generally deducted on:
- Salary payments
- Contractor payments
- Professional fees
- Rent payments
- Commission and brokerage
How to Make TDS Payment Online Through Challan 281?
Businesses and deductors wondering how TDS payment can complete the process online through the Income Tax portal using Challan 281. Before starting the payment process, ensure that you have a valid TAN number, as TAN is mandatory for depositing TDS. Businesses that do not have TAN can first complete their TAN application before proceeding with TDS compliance.
Step 1: Visit the Income Tax Portal
Open the official Income Tax portal and go to the “e-Pay Tax” section available under Quick Links.
Step 2: Enter TAN Details
Enter the TAN of the deductor and complete OTP verification. It is important to verify TAN details carefully because incorrect TAN entry may lead to challan mismatch or rejection.
Step 3: Select Challan 281
After verification, select Challan 281 for TDS/TCS payment. Businesses that are unfamiliar with the challan process can also refer to our guide on filing income tax challan online to understand the payment process in detail.
Step 4: Choose the Payment Type
Select the applicable payment type based on the nature of TDS liability. Choosing the wrong payment category may create notices or reconciliation issues later.
Step 5: Enter Assessment Year and Payment Details
Select the correct:
- Assessment Year
- Nature of payment
- Deductee category
After that, enter the TDS amount, interest amount, and late fee, if applicable.
Step 6: Complete the TDS Payment Online
Select your preferred bank and complete the payment through net banking. Once the payment is successful, a Challan Identification Number (CIN) receipt will be generated.
Step 7: Download the Challan Receipt
After successful payment, download the Challan Identification Number (CIN) receipt for future reference. Today, businesses mainly prefer TDS payment online because challan tracking and reconciliation become easier.
You must download and save the challan receipt carefully, as it will be required while completing TDS return filing under the prescribed due dates.
Step 8: Verify Return Status After Filing
After filing the TDS return, deductors should regularly reconcile challan details and check TDS Return Status Via PAN Card to ensure that the payment is correctly reflected in the records.
Note: Businesses managing multiple tax compliances often seek professional assistance for both TDS and GST return filing to maintain timely and accurate compliance.
How to make TDS payment Through Bank: Online vs Offline Method
Many deductors also want to know how to make TDS payment through Bank, especially when they prefer offline payment methods or face issues with online banking. Under the Income Tax provisions, TDS can be deposited either through net banking using the Income Tax portal or by visiting an authorized bank branch with Challan 281.
Online Method
- Under the online method:
- Payment is made through net banking
- Challan acknowledgement is generated instantly
- TRACES reconciliation becomes easier
Offline Method
- Under the offline method:
- Challan 281 is submitted physically at authorized banks
- Payment is made through cheque or demand draft
However, most businesses now prefer online payment methods for faster compliance.
How to Calculate TDS on Payment Before Deposit?
Before understanding how to make TDS payment, businesses should first calculate the correct TDS amount to avoid short payment, excess deduction, or additional interest later. The amount of TDS mainly depends on the type of payment, applicable TDS section, threshold limit, and whether the deductee has provided a valid PAN.
TDS is commonly deducted on payments such as:
- Salary
- Contractor payments
- Professional fees
- Rent
- Commission or brokerage
The basic formula used for TDS calculation is: TDS = Amount Subject to TDS × Applicable TDS Rate
For example, if a business pays ₹1,00,000 to a contractor and the applicable TDS rate is 1%, then the TDS amount will be ₹1,000.
While understanding how to make TDS payment online, deductors should also know that delayed payment may attract interest under the Income Tax Act, 2025. The interest is generally calculated using the following formula: Interest = TDS Amount × 1.5% × Number of Months
Calculating the correct TDS amount before making payment helps businesses avoid notices, penalties, and challan correction issues later.
How to make TDS Payment and avoid Interest?
In case of delay or short payment, deductors must understand how to make TDS payment.
Default situations may include:
- Late deduction
- Late deposit
- Short deduction
- Incorrect challan reporting
Under the Income Tax Act, 2025, interest may apply for delay in deduction or deposit of TDS. In cases of default, interest is generally levied under Section 201 for non-deduction or delayed payment of TDS. Additionally, late filing fees may also apply for delay in filing TDS returns within the prescribed due dates.
Therefore, while understanding how to make TDS payment online, deductors should ensure that the correct payment type, assessment year, and challan details are selected carefully to avoid future notices, challan mismatches, or demand raised by the Income Tax Department.
Reasons Why TDS Payment Gets Rejected
TDS payment may get rejected due to:
- Incorrect TAN
- Wrong assessment year
- Invalid section code
- Challan mismatch
- Incorrect payment details
- Bank transaction failure
- Incorrect details may also create mismatch issues during TDS return filing.
- Due Dates for TDS Payment and Return Filing
Generally, TDS deducted during a month must be deposited by the 7th of the following month. For March deductions, the due date is usually 30th April.
Quarterly TDS returns under the Income Tax Act, 2025 include:
- Form 138 (Old Form 24Q)
- Form 140 (Old Form 26Q)
- Form 144 (Old Form 27Q)
Timely payment and return filing are important to avoid notices and default interest under the Income Tax Act, 2025. Businesses can also refer to the TDS and TCS compliance calendar FY 2026-27 to stay updated with important compliance deadlines throughout the financial year.
Why Choose Ebizfiling for TDS Compliance?
At Ebizfiling, we provide expert assistance for TDS payment, quarterly TDS return filing, correction statements, and overall TDS compliance management. Our professionals help businesses manage Form 138, 140, 144, and Form 143 filings accurately and within due dates to avoid penalties, notices, and reconciliation issues. Businesses looking to understand how to make TDS payment online or seeking professional support for online TDS payment and TDS return filing can also get assistance with challan correction, PAN-TAN validation, and end-to-end TDS compliance services.
Need help with TDS payment or return filing? Connect with Ebizfiling India Pvt Ltd experts for accurate and stress-free TDS/TCS compliance support.
Conclusion
Understanding how to make TDS payment is important for every business and deductor under the Income Tax Act, 2025. Proper TDS payment online, correct challan selection, timely filing, and accurate reporting help businesses avoid penalties, interest, and compliance issues.
Businesses should regularly reconcile challans and maintain proper records to ensure smooth TDS compliance and return filing.
FAQs on How to Make TDS Payment
1. Is TAN mandatory for TDS payment online?
Yes, TAN is compulsory for making TDS payment online. Without a valid TAN, businesses cannot deposit TDS through Challan 281 or file quarterly TDS returns on the Income Tax portal.
2. Which challan is used for TDS payment?
Challan 281 is used for depositing TDS and TCS with the government. While learning how to make TDS payment, deductors must select the correct challan type to avoid payment mismatch issues later.
3. Can TDS payment be made after the due date?
Yes, delayed TDS payment can still be deposited online. However, interest and late payment liabilities may apply depending on the period of delay and nature of default under the Income Tax provisions.
4. What happens if incorrect TAN is entered during TDS payment?
Incorrect TAN may cause challan rejection or mismatch during TDS return filing. In many cases, businesses need to file a challan correction request to rectify the payment details.
5. How can businesses verify successful TDS payment online?
After completing TDS payment online, businesses receive a Challan Identification Number (CIN). This receipt can later be verified through challan status and TDS return reconciliation records.
6. Is net banking compulsory for TDS payment online?
No, businesses can also make payment through authorized bank branches using Challan 281. However, most deductors prefer online payment methods because the process is faster and easier to track.
7. What is the penalty for non-payment of TDS?
Failure to deposit TDS after deduction may attract interest under Section 201 of the Income Tax Act, 2025. In addition, the Income Tax Department may initiate recovery proceedings and levy penalties in certain cases of non-compliance. The exact liability depends on the nature and duration of the default.
8. Can one challan be used for multiple TDS sections?
Yes, one TDS challan may be used for multiple deductees and TDS sections if the deductee category and payment type are the same. However, accurate challan allocation and reporting in quarterly TDS returns are essential to avoid mismatches and notices.
9. Does Ebizfiling help businesses with TDS payment correction?
Yes, Ebizfiling assists businesses with challan correction, TAN validation, TDS reconciliation, and correction statements to resolve payment mismatch and return filing issues efficiently.
10. Can Ebizfiling help with complete TDS compliance management?
Yes, Ebizfiling provides end-to-end support for businesses looking to understand how to make TDS payment online, quarterly TDS return filing, correction statements, and overall TDS compliance services.
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