How TDS Filing Works for NGOs & Trusts in India

If you are running an NGO or managing a trust in India, you’re probably focused on your mission—helping society, educating children, or supporting healthcare. But along with that noble cause, there’s also a not-so-glamorous but essential part of the job—TDS compliance.

Yes, even NGOs and charitable trusts are required to deduct and file TDS (Tax Deducted at Source) in certain cases. So if you’re confused about how TDS filing works for NGOs, or wondering whether you should use a TDS return filing software, then this guide is made just for you.

Let’s break it down step-by-step.

Why TDS Filing is Important for NGOs and Trusts

Many people assume that NGOs and trusts are exempt from TDS because they are non-profit in nature. But that’s not true. As long as the NGO or trust makes certain types of payments—like salaries, contractor bills, or professional fees—it must deduct TDS just like any business.

Failing to comply with TDS provisions can result in:

• Penalties under Section 234E (₹200 per day of delay)
  
  

• Interest under Section 201(1A) for late deduction/deposit
  
  

• Disallowance of expenses during the audit

So yes, timely and accurate TDS filing is not just a formality—it’s mandatory.

When is TDS Applicable to NGOs and Trusts?

TDS is applicable when NGOs:

• Pay salary to employees exceeding the exemption limit
  
  

• Hire freelancers, consultants, or professionals
  
  

• Make payments to contractors for services or events
  
  

• Earn interest on FDs or savings

Here are a few common TDS sections that apply:

So even if you are a registered charitable trust or an 80G-compliant NGO, these TDS obligations still apply when making these types of payments.

Do NGOs Need PAN and TAN?

Yes. To deduct and file TDS, your NGO must have:

• PAN (Permanent Account Number) for tax identity
  
  

• TAN (Tax Deduction Account Number) for filing returns

If you don’t have a TAN, you can apply online through the NSDL portal. It usually takes 7–10 working days.

How TDS Deduction and Payment Works for NGOs

Let’s take a real-world scenario. Your NGO hires a consultant for digital marketing and pays ₹40,000 for services. Since it’s a professional fee under Section 194J, you must:

1. Deduct 10% TDS = ₹4,000
   
   

2. Deposit the TDS using Challan 281 before the 7th of the following month
   
   

3. File TDS return quarterly in Form 26Q
   
   

4. Issue Form 16A to the consultant as proof of deduction

This same logic applies to other applicable sections, too.

Quarterly TDS Returns: What NGOs Need to File

TDS returns must be filed every quarter using the correct forms. Here’s a simple breakdown:

Forms used:

• Form 24Q – For salary TDS
  
  

• Form 26Q – For all non-salary TDS

TDS Return Filing Software: A Smarter Option for NGOs

Let’s be honest—manual TDS filing can be a headache. Between PAN checks, challan mapping, and FVU file generation, it’s easy to make errors. That’s where TDS return software comes in.

Using a tds return filing software can:

• Save 70–80% of your time
  
  

• Eliminate manual errors
  
  

• Auto-generate forms like 16A, 27A, FVU files
  
  

• Send reminders for due dates
  
  

• Help manage records year after year
  
  

Many Indian NGOs and CA firms now prefer cloud-based or desktop-based TDS software tools because they make the whole process smoother and more accurate.

Popular TDS software options in India include:

• ClearTDS – Good for small NGOs, cloud-based
  
  

• Saral TDS – Robust desktop-based tool
  
  

• Winman TDS – Used by many CA professionals
  
  

• Zen TDS – Budget-friendly for bulk filings

Issuing TDS Certificates (Form 16A) to Vendors

After filing returns, NGOs must issue Form 16A to vendors and consultants. This proves that TDS has been deducted and paid. With software, you can:

• Auto-generate Form 16A
  
  

• Email it directly to payees
  
  

• Avoid manual mistakes and duplication

If you miss issuing TDS certificates on time, it may affect vendor relationships and compliance.

Handling Errors & Corrections in TDS Returns

Let’s say you filed TDS with the wrong PAN or incorrect challan number. What happens next?

You’ll get a notice from TRACES or the Income Tax Department, and you’ll need to file a correction return. Most tds return filing software allows you to:

• Track your earlier submissions
  
  

• Correct entries
  
  

• Re-generate FVU files
  
  

• Re-upload corrected returns easily

Common Mistakes NGOs Should Avoid

1. Not deducting TDS when required
   
   

2. Missing due dates for deposits or returns
   
   

3. Filing under the wrong section or form
   
   

4. Not issuing Form 16A
   
   

5. Using outdated NSDL utilities

All these can lead to penalties, show-cause notices, or disallowance during audits. So, being proactive with a reliable tds return software can save you a lot of trouble.

Final Thoughts: Stay Compliant, Stay Focused

Running an NGO is already a big responsibility. You have funds to manage, lives to impact, and causes to fight for. Why waste time juggling manual tax compliance?

By using TDS return filing software, you:

• Save time and energy
  
  

• Avoid costly penalties
  
  

• Maintain cleaner financial records
  
  

• Focus more on your mission, not just tax deadlines

So if you haven’t already, it's time to ditch the spreadsheets and move to a smarter way of managing TDS.