TDS return on non-salary payments to residents: Form 140 (formerly Form 26Q)

What does Form 140 cover?

The Income-tax Act 2025 consolidates the 194-series TDS provisions of the old law into a table in section 393. Form 140 reports TDS on all non-salary payments to residents under that section: contracts, professional and technical fees, rent, commission, interest other than on securities, dividends, purchase of goods and similar payments.

Tax deducted up to 31 March 2026 belonged to FY 2025-26 and was reported in Form 26Q, with the January-March 2026 statement due by 31 May 2026. Tax deducted from 1 April 2026 is reported in Form 140. Payments to non-residents go in Form 144, and property purchase TDS by individuals in the consolidated Form 141.

Common thresholds and rates

The thresholds were raised by the Finance Act 2025 from 1 April 2025 and carried into the new Act. Always check the current table before deducting, because rates differ by payee type.

Late fee, interest and penalty

A late statement attracts ₹200 a day until filing, capped at the TDS in that statement, payable before the statement is processed. Interest is charged on the tax at 1% a month for late deduction and 1.5% a month for late deposit, counting part of a month as a full month.

If tax is not deducted at all, the payer can be treated as an assessee in default for the tax, and the expense can be partly disallowed in computing business income. A penalty of ₹10,000 to ₹1 lakh can apply for failure to file or incorrect particulars. Since the Finance Act 2025 removed the higher rate for non-filers of returns, the main higher-rate trigger is a missing or inoperative PAN, at 20%.

What data do you need?

A clean Form 140 depends on vendor master data more than anything else. Collect PANs at onboarding and check their status on the e-filing portal before making the first payment to any new vendor.

• Deductee name, PAN and payment type, mapped to the section 393 code
• Amount paid or credited, date, and TDS deducted
• Challan details for each deposit through ITNS 281N
• Lower or nil deduction certificates issued to vendors, now in the 2026 Rules series
• Reasons for non-deduction or lower deduction, where applicable

Common errors and consequences

Errors that generate TRACES defaults include wrong PANs, using old 194-series codes for transactions after April 2026, mismatched challans, deducting below the prescribed rate without a certificate, and late deposits. Each default appears as a demand on the deductor's TRACES account.

Vendors rely on your return to claim credit in their own tax returns, so errors lead to disputes and withheld invoices. Certificates in Form 131 must be issued within 15 days of each statement's due date. Refogo's partner professionals can file non-salary TDS returns for a fixed fee.

Step by step

1. 1Map payments to section codes

   Tag each vendor payment with the correct section 393 code and rate.

2. 2Deposit TDS monthly

   Pay by the 7th of the next month (30 April for March) through ITNS 281N.

3. 3Prepare Form 140

   Use the Return Preparation Utility with deductee and challan details.

4. 4Validate and upload

   Generate the FVU file and upload through TAN login, selecting the 2025 Act.

5. 5Issue Form 131

   Download certificates from TRACES and give them to deductees within 15 days of the due date.