TDS Challan

Definition

A TDS challan is the official payment instrument used by deductors to remit Tax Deducted at Source (TDS) to the credit of the Central Government. The most commonly used form is Challan No. 281 (also referred to as ITNS 281), which covers TDS and TCS (Tax Collected at Source) payments for all sections under the Income Tax Act, 1961.

In the Indian tax system, every person who deducts TDS (whether on salary under Section 192, contractor payments under Section 194C, or professional fees under Section 194J) must deposit the deducted amount using this challan within prescribed timelines. The challan can be paid online through the Income Tax Department's e-payment facility via authorised banks or offline at designated bank branches.

Upon successful payment, each challan generates a unique Challan Identification Number (CIN) comprising the BSR code of the bank branch, the challan serial number, and the date of deposit. This CIN is critical for TDS return filing, as each deduction entry in Forms 24Q, 26Q, or 27Q must be mapped to its corresponding challan CIN. Errors in CIN mapping are one of the most common causes of demand notices from the TRACES processing system.

Key Points

• Challan No. 281 (ITNS 281) is the prescribed form for depositing TDS and TCS with the government
• TDS must be deposited by the 7th of the month following the month of deduction (30th April for March deductions)
• Each challan generates a unique CIN (Challan Identification Number) comprising BSR code, serial number, and date
• Online payment is available through the e-payment facility on the Income Tax Department portal via net banking
• Late deposit of TDS attracts interest at 1.5% per month under Section 201(1A) from the date of deduction to the date of deposit
• The challan must specify the correct TAN, assessment year, section code, and nature of payment
• CIN details must be accurately reported in quarterly TDS returns for proper credit to deductees in Form 26AS