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How to file Nil tds return in traces

Filing a Nil TDS return on TRACES is technically a Declaration for Non-Filing of TDS Statements. While not strictly mandatory under the Income Tax Act if no tax was deducted, it is highly recommended to avoid receiving non-filing notices from the department.

Steps to File Nil Declaration on TRACES upto FY 2025-26

Login: Access the TRACES portal using your Admin User credentials (User ID as TAN, Password, ).
Navigate to Income Tax Act 1961 and then go to Declaration: Go to the Statement/Payments tab and select Declaration for Non-Filing of TDS Statements.
Select Period details: Choose the following from the drop-down menus:
- Financial Year (e.g., 2025-26).
- Quarter (Q1, Q2, Q3, or Q4).
- Form Type (24Q, 26Q, 27Q, or 27EQ).
Choose a Reason: Select the applicable reason for not filing, such as:
- Not liable to deduct for the selected period.
- No payment made/credited to deductee.
- Business temporarily or permanently closed.
- Payment below threshold limit.
Submit: Click Add Statement Details, then click Proceed. Review the declaration, tick the confirmation box, and click Submit.
Confirmation: You will receive a success message and a confirmation email on your registered ID.

Important Considerations

Changing Status: If you later realize you need to file a regular return for that period, you can change the status from “Non-Filing” to “Filing,” but the portal typically allows this change only once for a specific period.
When to File a Regular Return Instead: If you have made payments to vendors or employees but did not deduct tax (e.g., due to lower deduction certificates), you should ideally file a regular return with “Nil” challan details rather than a non-filing declaration to ensure the deductees get proper credit in their Form 26AS.