Set up TDS and TCS

Switch on TDS and TCS, enter your TAN and responsible person, and check the section rates the app will use.

TDS and TCS are income-tax deductions and collections. They are separate from GST. The module is off when you start. Nothing about TDS or TCS appears on your bills until you switch it on here.

The app follows the Income-tax Act 2025. The quarterly returns are made as the new forms (Form 140 for TDS on purchases, Form 143 for TCS on sales), which replace 26Q and 27EQ.

Before you start

• Fill in your Business Profile first. The PAN, address, PIN code, state and email for your returns are taken from there.
• Keep your TAN and the details of the person responsible for TDS (name, PAN, designation, address) ready.

Steps

1. Open TDS & TCS > Setup & Rates.
2. Under Enable module, switch on TDS if you deduct tax when you pay suppliers.
3. Switch on TCS if you collect tax from buyers on sales.
4. Wait for the message Enabled — section library & ledgers set up. The app now fills the section list and creates the ledgers it needs.
5. In Deductor / Collector details, enter your TAN, Deductor Type and Deductor Name.
6. Under Person responsible, enter the name, PAN, Designation, Phone and Email.
7. Under the responsible person's address, enter Address (Flat / Door / Block), City / District, State and PIN Code.
8. Click Save.
9. Check the Section & rate library table (see below).

When you switch a module on for the first time, these ledgers are created:

Check and edit the section rates

The section library comes with default sections, rates and limits. They are only a starting point. Rates and limits change often. You must check every rate you use against the current Income-tax rules before you file. The app does not update them for you.

1. In Section & rate library, find the section you use.
2. Click in the Rate %, No-PAN %, Threshold (single) or Threshold (annual) box and type the correct value.
3. Correct the §2025 or Pay code box if needed. The pay code is printed on the quarterly return, so it must be right.
4. Click Save rates. The button stays grey until you change something.
5. To stop a section from being offered, switch off Active for that row. The row turns faded.

Add your own section

1. Click Add in the Section & rate library header.
2. Choose Type (TDS or TCS).
3. Enter Section code and Description. Both are needed.
4. Enter Rate % and, if there is one, the Annual threshold.
5. Click Add.

To remove a section you added, click the delete icon at the end of its row. Default sections have no delete icon. Switch them off with Active instead.

Fields

Highlights (Old vs New Act)

Open TDS & TCS > Highlights (Old vs New Act) for a reading page. It compares the Income-tax Act, 1961 with the Income-tax Act, 2025: what changed, the renamed returns and certificates, a compliance calendar and a section-wise table. It changes nothing in your books. The figures on it are for reference only. Your own rates are the ones in Setup & Rates. Click Settings → TDS / TCS on that page to go back to the setup screen.

Common problems

• Enter section code and description — you clicked Add with an empty Section code or Description. Fill both.
• Default sections can't be deleted — set inactive instead. — switch off Active for that row.
• The rate table and details do not appear — neither TDS nor TCS is switched on. Switch on at least one.
• The return says the deductor state code is missing — the state name in your Business Profile was not recognised. Check it in Business Profile.

Related

• TDS register and challans
• TDS returns and certificates
• Record a purchase bill
• Create a sales invoice
• Receipt, payment and journal vouchers

More in TDS / TCS