How to File Nil TDS Return: A Complete Guide for 2026

For many businesses, especially startups and MSMEs, understanding tax compliance can be as daunting as securing Complete Intellectual Property Protection. A common point of confusion is what to do when you have a TAN but haven’t deducted any tax. The answer is simple, you need to know how to file nil TDS return. This guide breaks down the entire process, ensuring your business stays compliant and avoids penalties. Updated for 2026, we provide a clear roadmap for this essential task.

What is a Nil TDS Return?

Understanding the basics is the first step towards perfect compliance. A nil TDS return is not an omission, but an important declaration to the Income Tax Department.

Defining a Nil TDS Return

A nil TDS return is a statement filed by a deductor who holds a valid Tax Deduction and Collection Account Number (TAN) but has not deducted or collected any tax during a specific quarter. It is an official declaration confirming ‘no TDS transactions’ for that period. It’s crucial to differentiate this from not filing at all. Filing a nil return is an active compliance step that informs the tax authorities of your status, whereas not filing is a default.

When is Nil TDS Filing Required?

You might need to file a nil TDS return in several common business scenarios. Filing is necessary if:

• No payments that are subject to TDS were made during the quarter.
• Payments were made, but they were all below the prescribed TDS threshold limits.
• Payments were made to vendors who submitted Form 15G/15H, requesting no tax deduction.
• Your new business has obtained a TAN but has not yet started making payments that require TDS.

At Bharat Comply, we assist with TAN registration as part of our Company Registration service, which can also be bundled with a Business Valuation, ensuring new businesses are aware of these obligations from day one.

Why Filing a Nil Return is Crucial

Ignoring this simple filing can lead to significant financial penalties. It’s a small step that protects your business’s compliance record.

Avoiding Late Filing Fees

The Income Tax Department actively tracks compliance for every TAN holder. If you fail to file a return for a quarter, the system marks it as a default, regardless of whether any tax was due. This default attracts a penalty under Section 234E of the Income Tax Act, which is ₹200 for every day of delay. Knowing how to file nil TDS return on time is a straightforward way to maintain a clean compliance record and avoid these unnecessary costs.

Who Must File a Nil TDS Return?

The obligation to file is tied directly to holding a TAN. If your business has one, filing is mandatory.

Understanding Your TAN Obligations

Any person or entity, including an Individual, HUF, Company, LLP, or Partnership Firm, that possesses a TAN is required to file a TDS return for every quarter of the financial year. If no tax was deducted during a quarter, a nil return must be filed. This is a non-negotiable compliance requirement. Services like Bharat Comply’s Business Startup Journey ensure that founders complete all necessary registrations, including TAN, and are made fully aware of their subsequent filing obligations from the very beginning, guiding them from Ideation to IPO.

Prerequisites for Filing Your Return

Before you begin the filing process, ensure you have the following information and tools ready.

Documents and Information Needed

• A valid and active Tax Deduction and Collection Account Number (TAN).
• Login credentials for the Income Tax e-filing portal.
• A registered Digital Signature Certificate (DSC) for the authorized signatory, which is mandatory for companies and LLPs.
• Details of the authorized person, including their PAN and contact information.
• The latest version of the Return Preparation Utility (RPU) software, downloadable from the NSDL portal.

How to File Nil TDS Return on TRACES

The process of filing is done online through government portals. Here’s a detailed look at how to file nil TDS return on traces and the e-filing website.

Registering on the TRACES Portal

TRACES (TDS Reconciliation Analysis and Correction Enabling System) is the portal for viewing challan status, downloading Form 16/16A, and managing TDS data. While the final upload happens on the e-filing portal, having a TRACES registration is essential for overall TDS management. First-time users can register as a ‘Deductor’ using their TAN and other verification details.

The Online Filing Process

Here is a step-by-step guide on how to file nil TDS return:

1. Download the latest Return Preparation Utility (RPU) from the TIN-NSDL website.
2. Open the RPU and select the relevant form, such as Form 24Q for salary payments or Form 26Q for other non-salary payments.
3. Fill in the mandatory fields on the ‘Form’ tab with the deductor’s details like TAN, PAN, address, and responsible person’s details.
4. Since this is a nil return, you do not need to add any challan or deductee details. Leave those sections blank.
5. Click the ‘Create File’ button. The utility will perform a validation check. If there are no errors, it will generate a .fvu (File Validation Utility) file.
6. Log in to the Income Tax e-filing portal (incometax.gov.in).
7. Navigate to ‘e-File’ -> ‘Income Tax Forms’ -> ‘File Income Tax Forms’.
8. Under ‘Deduction of Tax at Source (TDS)’, select the option to upload the TDS return.
9. Upload the .fvu file you generated in step 5.
10. Verify the return using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) to complete the submission. This completes the process of understanding how to file nil TDS return on traces via the e-filing portal.

Understanding the Declaration for Nil TDS

Sometimes, you may have transactions but still file a nil challan. This often involves specific declaration forms.

When to Use Form 15G/15H

Form 15G (for individuals below 60 and others) and Form 15H (for senior citizens) are declarations submitted by a payee to a payer. These forms state that the payee’s estimated total income for the year will be below the taxable limit, and therefore, no TDS should be deducted. When a deductor receives these forms, which are a form of declaration requiring careful handling like any other Legal Drafting, they must not deduct tax on those specific payments. This is a primary reason why a business needs to know how to file declaration for nil TDS return. In such cases, the return will show deductee details but have a nil challan, as no tax was actually deducted and deposited. This is different from a pure nil return where there are no transactions to report at all, but understanding how to file declaration for nil TDS return is equally important for compliance.

Common Mistakes to Avoid When Filing

Even a simple process can have pitfalls. Awareness of these common errors can save you time and potential penalties.

Common Filing Errors

• Forgetting to File: The most frequent mistake is assuming that no transactions mean no filing is required. This is incorrect and leads to default.
• Using an Outdated RPU: Always download the latest version of the Return Preparation Utility from the NSDL website to avoid validation errors.
• Incorrect Financial Year or Quarter: Double-check that you have selected the correct assessment year, financial year, and quarter before generating the file.
• Missing the Filing Deadline: Late filing directly results in penalties. Mark the due dates in your compliance calendar.
• Failing to Verify: Simply uploading the .fvu file is not enough. The return is only considered filed after it has been successfully verified using DSC or EVC.

Consequences of Not Filing on Time

The penalties for non-compliance are automatic and can add up quickly. It’s crucial to understand the financial and legal risks involved.

Here is a summary of the key differences between filing a nil return and not filing at all.

Aspect	Filing a Nil TDS Return	Non-Filing of TDS Return
Compliance Status	Considered compliant	Considered a default
Penalty (Sec 234E)	Not applicable if filed on time	₹200 per day of default
Legal Implications	Maintains a clean record	Can lead to notices and prosecution
Impact on Business	Positive compliance history	Negative impact on compliance score

Penalties Under Section 234E

As mentioned, a late filing fee of ₹200 per day is levied under Section 234E until the return is filed. For example, if a return due on July 31st is filed 30 days late, the penalty would be 30 days * ₹200 = ₹6,000. While the law states the penalty cannot exceed the TDS amount, the default is still recorded by the department, which can affect your overall compliance rating.

Prosecution Risks for Non-Compliance

Persistent failure to file TDS returns, even nil returns, can be viewed seriously by the tax authorities. In extreme and prolonged cases of non-compliance, the department may initiate prosecution proceedings against the deductor. This underscores the importance of staying on top of all filing obligations, no matter how minor they may seem.

This table outlines the standard due dates for filing TDS returns.

Quarter	Period	Due Date for Filing
Quarter 1	April 1 to June 30	July 31
Quarter 2	July 1 to September 30	October 31
Quarter 3	October 1 to December 31	January 31
Quarter 4	January 1 to March 31	May 31

Simplify Compliance with Bharat Comply

Managing tax regulations can be complex and time-consuming. Bharat Comply is here to help you navigate these requirements seamlessly.

How Our Experts Can Help

At Bharat Comply, we empower entrepreneurs and SMEs by managing their end-to-end compliances. Even a simple task like understanding how to file nil TDS return can be overlooked amidst the pressures of running a business. Our dedicated Income Tax Filing and Compliance Services, including GST Return Filing Services, ensure that all your deadlines are tracked and met without fail. We handle the complexities so you can stay focused on growth. Focus on growing your Bhartiya business, and let Bharat Comply handle the intricacies of compliance. Get in touch with our experts today!

Frequently Asked Questions

Q1. What is the due date for filing a nil TDS return?

The due dates are the same as for regular TDS returns: July 31, October 31, January 31, and May 31 for the four quarters of a financial year.

Q2. Is there a penalty for not filing a nil TDS return?

Yes, a penalty of ₹200 per day is levied under Section 234E for late filing, even if no tax was due.

Q3. Can I file a nil TDS return offline?

No, TDS returns, including nil returns, must be filed electronically through the Income Tax e-filing portal.

Q4. Do I need a Digital Signature Certificate (DSC) to file a nil TDS return?

A DSC is mandatory for companies and LLPs. Other deductors can file and verify using an Electronic Verification Code (EVC).

Q5. What is the difference between a nil TDS return and a nil challan?

A nil TDS return means no TDS transactions occurred. A nil challan means transactions occurred but no tax was deducted, often due to Form 15G/15H.

Q6. How do I file a nil return step-by-step?

You need to use the RPU to create a .fvu file with only deductor details, then upload and verify it on the income tax e-filing portal.

Q7. How do I file a nil tax return?

A nil tax return refers to an Income Tax Return (ITR) where no tax is payable, which is a different process from filing a nil TDS return.

Q8. How to file nil ITR step-by-step?

To file a nil ITR, you log in to the e-filing portal, select the relevant ITR form, fill in your income details (which would be below the taxable limit), and submit it.