TDS payment is the process of depositing tax deducted at source with the government using Challan ITNS 281 (or ITNS 281N for Tax Year 2026-27 onward), through the e-Pay Tax service on the Income Tax e-filing portal. Deductors must deposit TDS by the 7th of the following month, except for March, where the deadline extends to April 30. Missing this deadline triggers interest at 1.5% per month under Section 398(3) of the Income-tax Act, 2025 (Section 201(1A) of the 1961 Act for older periods).
This guide covers TDS payment, advance tax payment, and general income tax online payment, since all three route through the same e-Pay Tax facility and taxpayers frequently confuse them.
What Is TDS Payment
TDS, or Tax Deducted at Source, is tax the payer deducts before making a payment such as salary, rent, professional fees, contractor payments, or interest. The deductor holds this money in trust for the government. TDS payment is the act of depositing that deducted amount with the Central Government, and it is separate from filing the TDS return, which reports the deduction quarterly.
A common mix-up: TDS payment happens monthly, TDS return filing happens quarterly. Paying TDS on time does not exempt a deductor from filing Form 24Q, 26Q, or 27Q later. Both obligations carry their own due dates and their own penalties.
Every business, employer, or individual with a valid TAN who deducts tax under sections such as 192 (salary), 194J (professional fees), 194I (rent), or 194C (contractor payments) must deposit that TDS using the correct challan.
Challan ITNS 281 vs ITNS 281N
The Income Tax Act, 2025 replaced the Income-tax Act, 1961, effective April 1, 2026. This split TDS challans into two forms depending on which period the deduction relates to.
| Challan | When to use | Governing law |
|---|---|---|
| ITNS 281 | TDS/TCS relating to periods up to and including March 2026 (Assessment Year up to AY 2026-27) | Income-tax Act, 1961 |
| ITNS 281N | TDS/TCS relating to Tax Year 2026-27 onward (deductions from April 2026) | Income-tax Act, 2025 |
Both forms cover Corporation Tax (Major Head 0020) and Income Tax Other than Companies (Major Head 0021), with minor heads for TDS/TCS Payable by Taxpayer (200), TDS/TCS Regular Assessment (400), and Payment against PAN Based TDS Demand (800). ITNS 281N adds the ability to combine payments across multiple TDS sections, such as salary and rent, into a single challan, something the earlier system did not allow.
If a deductor is depositing a belated payment for a deduction made before April 2026, ITNS 281 with the correct Assessment Year still applies. Mixing up the two forms is one of the most common TDS payment errors reported since the transition.
How to Pay TDS Online: Step by Step
- Log in to the e-filing portal (incometax.gov.in) with the TAN and password.
- On the Dashboard, go to e-File, then e-Pay Tax.
- Select the applicable Act: Income-tax Act, 1961 for periods up to March 2026, or Income-tax Act, 2025 for Tax Year 2026-27 onward.
- Choose the TDS/TCS payment tile and enter the Assessment Year or Tax Year, the TDS section code, and the deduction amount.
- Add the tax break-up (tax, surcharge, cess, interest, and fee if applicable) and click Continue.
- Choose a payment mode: net banking, debit card, RTGS/NEFT, UPI, or Pay at Bank Counter through one of the authorized banks listed on the portal.
- Complete the payment and download the challan receipt, which carries the BSR code, challan serial number, and date. Keep this for TRACES reconciliation and for the quarterly TDS return.
The pre-login route works the same way for a deductor who wants to generate a challan without signing in: PAN and mobile number, OTP verification, then the same tile selection.
TDS Payment Due Dates
| Deduction month | Due date for non-government deductors |
|---|---|
| April to February | 7th of the following month |
| March | April 30 |
| Government deductors paying by book entry | Same day as deduction |
A deadline falling on a bank holiday moves to the next working day. One detail practitioners flag often: an electronic payment initiated after banking cut-off hours is processed the next working day, and that shift can push a payment past the deadline even though the taxpayer clicked “pay” on time. Do not treat the click timestamp as the payment date; check the challan receipt date.
TDS payment and TDS return filing run on different clocks. The table below covers the return side, since deductors often assume paying on time also covers the filing obligation.
| Quarter | Period covered | Return due date |
|---|---|---|
| Q1 | April to June | July 31 |
| Q2 | July to September | October 31 |
| Q3 | October to December | January 31 |
| Q4 | January to March | May 31 |
Forms differ by payment type: Form 24Q for salary TDS, Form 26Q for non-salary domestic payments, Form 27Q for payments to non-residents, and Form 26QB or 26QC for one-off TDS on property purchases or high-value rent, which does not require a TAN and is filed as a challan-cum-statement within 30 days of the end of the month of deduction rather than on the quarterly cycle.
Interest and Penalty for Late TDS Payment
Late TDS payment carries three separate consequences, and they can stack.
| Default | Provision (2025 Act / 1961 Act) | Rate |
|---|---|---|
| Late deposit of TDS after deduction | Section 398(3) / Section 201(1A) | 1.5% per month, calculated from the date of deduction to the date of actual deposit |
| Late deduction of TDS | Section 398(3) / Section 201(1A) | 1% per month, from the date TDS became deductible to the date it was deducted |
| Late filing of the TDS/TCS statement | Section 427 / Section 234E | ₹200 per day, capped at the total TDS/TCS amount |
| Failure to deposit TDS at all | Section 476 / Section 276B | Prosecution, three months to seven years imprisonment plus fine |
Interest is calculated per calendar month, not per day, so a one-day delay past the due date still costs a full month’s interest. If TDS deducted on July 21 is deposited on August 8 instead of by August 7, interest is charged for two months, not for one month and one day.
Interest under Section 398(3)/201(1A) is automatic once a return is processed and cannot be waived through the assessing officer except in genuine cases such as documented bank or portal system failure, and even then relief is discretionary, not guaranteed.
Correcting a TDS Payment Error
Wrong Assessment Year, wrong PAN or TAN, wrong amount, or wrong minor head are the most frequent challan errors, and they block tax credit from reaching the deductee until fixed. Two routes exist, and which one applies depends on how much time has passed.
- Bank-level correction (physical challans, within 7 business days): Approach the collecting bank branch with the original challan counterfoil. The bank can correct limited fields, such as Assessment Year, amount, and minor head, within a 7-business-day window from the date of deposit.
- TRACES online correction (OLTAS correction, no strict time limit for most fields): Register on TRACES (TDS Reconciliation Analysis and Correction Enabling System) with a digital signature, go to Statements/Payments, then Request for OLTAS Challan Correction. This route allows correcting the minor head (200 or 400), major head (company or non-company), and most section codes, provided the challan is unclaimed and matched, no refund request is pending against it, and no other correction is already in progress on it.
Section code 195 (payments to non-residents) cannot be corrected online; that correction must go through the jurisdictional Assessing Officer directly. PAN and TAN corrections in an already-filed TDS return are handled separately, through a deductee-level correction statement on TRACES rather than a plain challan correction.
Advance Tax Payment: Who Needs to Pay
Advance tax is income tax paid during the year it is earned, in four instalments, rather than as one lump sum at return-filing time. It applies to any taxpayer, salaried, freelancer, business owner, or investor, whose estimated tax liability for the year, after subtracting TDS and TCS already deducted, exceeds ₹10,000.
This catches income that has no TDS attached: freelance receipts, rental income, capital gains, interest on fixed deposits, and any case where an employer under-deducts TDS relative to the employee’s actual tax liability. A resident senior citizen aged 60 or above with no business or professional income is exempt and can instead settle the balance as self-assessment tax at return time.
Advance Tax Due Dates and Instalments (FY 2026-27)
| Due date | Cumulative percentage of estimated tax liability |
|---|---|
| June 15, 2026 | 15% |
| September 15, 2026 | 45% |
| December 15, 2026 | 75% |
| March 15, 2027 | 100% |
These percentages are cumulative, not additive. The September instalment is not a fresh 45%, it is the total that should have been paid by that date; the actual amount due at that instalment is the difference between 45% and whatever was already paid in June.
Taxpayers who have opted for presumptive taxation under Section 44AD or Section 44ADA can skip the quarterly schedule entirely and pay 100% of their advance tax in a single instalment by March 15.
Worked example. A taxpayer estimates a net advance tax liability of ₹2,42,640 after TDS credit. Instalments would fall due as: ₹36,396 (15%) by June 15, a cumulative ₹1,09,188 (45%) by September 15, a cumulative ₹1,81,980 (75%) by December 15, and the full ₹2,42,640 by March 15.
How to Pay Advance Tax Online: Step by Step
- Go to incometax.gov.in and open e-Pay Tax under Quick Links (no login required for this route).
- Enter PAN, confirm the name displayed matches the PAN record, enter mobile number, and verify with OTP.
- Select the applicable Act, then choose the Income Tax/Corporation Tax tile.
- Select Minor Head 100 (Advance Tax). Do not select 300 (Self-Assessment Tax), which is for balance tax paid after the financial year ends and before filing the return.
- Enter the Assessment Year (for FY 2026-27, this is AY 2027-28) and the tax break-up.
- Choose a payment mode: net banking, debit card, credit card, UPI, or RTGS/NEFT.
- Download the challan receipt with the CIN (Challan Identification Number). This figure is required when filing the ITR and reconciling against Form 26AS.
Advance tax and self-assessment tax both route through ITNS 280 for periods under the 1961 Act, and through ITNS 280N for Tax Year 2026-27 onward. The most common data-entry error is selecting the wrong minor head, which misclassifies an advance tax payment as self-assessment tax or vice versa and complicates ITR reconciliation later.
Interest for Late or Short Advance Tax Payment
| Default | Provision (2025 Act / 1961 Act) | Calculation |
|---|---|---|
| Shortfall against the cumulative instalment percentage | Section 425 / Section 234C | 1% per month for three months on the shortfall (one month for the March instalment) |
| Total advance tax paid is under 90% of assessed tax by March 31 | Section 424 / Section 234B | 1% per month from April 1 of the assessment year to the date of actual payment |
Capital gains and unpredictable dividend income get a partial exemption from Section 234C interest: if such income arises after an instalment date has already passed, the taxpayer can settle the corresponding advance tax in the immediately following instalment without penalty for the earlier gap.
General Income Tax Online Payment: Payment Modes
The e-Pay Tax service supports six payment modes for TDS, advance tax, and self-assessment tax alike:
- Net Banking (through an authorized bank listed on the portal)
- Debit Card
- Credit Card
- UPI
- RTGS/NEFT (works even with a non-authorized bank)
- Pay at Bank Counter
As per Rule 333 of the Income-tax Rules, 2026, companies and certain other specified persons under Section 63 of the Income-tax Act, 2025 are required to make tax payments online; they cannot use the physical bank-counter route.
Common Mistakes That Delay or Misdirect Payments
- Selecting the wrong Assessment Year or Tax Year, which sends the payment to the wrong ledger and requires correction through the bank or TRACES.
- Using ITNS 281 for a Tax Year 2026-27 deduction, or ITNS 281N for a pre-April-2026 deduction, instead of matching the challan to the correct Act.
- Confusing Minor Head 100 (Advance Tax) with Minor Head 300 (Self-Assessment Tax).
- Treating a payment initiated near midnight as same-day, when banking cut-off rules can push processing to the next working day.
- Forgetting that TDS payment and TDS return filing have separate due dates and separate penalty structures; paying on time does not cover the filing obligation.
- Not downloading the challan receipt immediately, which then requires a Payment History lookup later to retrieve the BSR code and CIN.
What Experts Say
Tax practitioners handling multiple TAN accounts consistently flag two operational habits that prevent most TDS payment problems: setting a recurring reminder for the 7th of every month rather than relying on memory, and reconciling the challan against Form 26AS or TRACES within a few days of payment rather than waiting until quarterly return time. Practitioners also note that interest under Section 398(3)/201(1A) is rarely waived in practice, even when the delay is only a day or two, which makes the calendar reminder more valuable than any post-facto correction.
On advance tax, the recurring practitioner observation is that freelancers and consultants with variable monthly income are the group most likely to underpay the June and September instalments, simply because early-year income is harder to estimate. Revising the estimate at each instalment date, rather than locking in a single annual projection in April, is the adjustment most commonly recommended to avoid Section 234C interest.
FAQs
What is the due date for TDS payment? TDS deducted in any month must be deposited by the 7th of the following month, except for March, where the due date extends to April 30. Government deductors paying by book entry must deposit on the same day as deduction.
What is the difference between ITNS 281 and ITNS 281N? ITNS 281 is used for TDS/TCS payments relating to periods up to March 2026 under the Income-tax Act, 1961. ITNS 281N is used for Tax Year 2026-27 onward under the Income-tax Act, 2025, and allows combining multiple TDS sections into one challan.
What happens if TDS is paid late? Late deposit attracts interest at 1.5% per month under Section 398(3) of the Income-tax Act, 2025 (Section 201(1A) of the 1961 Act), calculated from the date of deduction to the date of actual deposit, with any part of a month counted as a full month.
Who needs to pay advance tax? Any taxpayer whose estimated tax liability for the year, after TDS and TCS credit, exceeds ₹10,000. Resident senior citizens aged 60 or above with no business or professional income are exempt.
What are the advance tax due dates for FY 2026-27? 15% of estimated tax by June 15, 2026, a cumulative 45% by September 15, 2026, a cumulative 75% by December 15, 2026, and 100% by March 15, 2027.
Can I pay advance tax and TDS on the same portal? Yes. Both route through the e-Pay Tax service on incometax.gov.in. TDS uses ITNS 281/281N; advance tax and self-assessment tax use ITNS 280/280N with Minor Head 100 or 300 respectively.
Is online tax payment mandatory? Under Rule 333 of the Income-tax Rules, 2026, every company and certain other specified persons under Section 63 of the Income-tax Act, 2025 must pay tax online. Individuals below that threshold can still use the Pay at Bank Counter option.
Where do I find my challan after payment? Log in to the e-filing portal, go to e-Pay Tax, then Payment History, and open the transaction to view or download the BSR code, challan serial number, and CIN.
What is the due date for filing the TDS return after payment? Q1 (April to June) is due July 31, Q2 (July to September) is due October 31, Q3 (October to December) is due January 31, and Q4 (January to March) is due May 31. Payment and return filing have separate deadlines and separate penalties.
I entered the wrong Assessment Year in my TDS challan. Can it be fixed? Yes. Within 7 business days of deposit, the collecting bank can correct the Assessment Year, amount, or minor head on a physical challan. Beyond that window, or for an online challan, the correction has to go through TRACES via an OLTAS Challan Correction request.