For startups and SMEs, payroll management can be tricky, especially when it comes to TDS deductions. Errors not only lead to penalties but also trigger scrutiny from the Income Tax Department. Here’s a quick guide to the most common TDS mistakes and how to fix them.

1. Incorrect Employee PAN or Missing Details

Using an invalid or missing PAN leads to higher TDS deductions and potential IT notices.

Solution: Verify employee PANs through the TRACES portal and update HR records before processing payroll.

2. Applying Wrong TDS Slabs

Using outdated or incorrect tax slabs can overburden employees and increase your liability.

Solution: Ensure the salary structure reflects the latest FY – TDS rates and update calculations accordingly.

3. Ignoring Exemptions & Deductions

Not accounting for HRA, LTA, or eligible investments results in over-deduction of TDS.

Solution: Adjust TDS after including all applicable exemptions and deductions to ensure accuracy.

4. Late TDS Deposits

Delays in TDS deposits attract 1.5% interest per month along with penalties.

Solution: Schedule automatic reminders and make timely TDS payments to avoid unnecessary interest and fines.

5. Incorrect or Delayed TDS Returns (Form 24Q)

Errors in filing Form 24Q invite scrutiny and IT notices.

Solution: Use payroll-integrated compliance software and get expert review before filing to ensure correctness and timely submission.

Accurate TDS deduction and timely compliance save both money and stress.

Key Takeaways:

• Verify employee PANs
• Apply correct tax slabs and exemptions
• Deposit TDS on time
• File accurate Form 24Q returns

Book your FREE TDS payroll compliance review today to safeguard your business.