Salary TDS return FILING if TDS is nil After Rebate u/s 87A
Whether TDS return is required to he filed in form 24Q (salary) for Q4 of FY 2025-26 in a scenario where total taxable income of all my employees is NIL after giving benefit of rebate u/s 87A of IT Act, 1961?
No, it is not legally mandatory to file the quarterly TDS return in Form 24Q for Quarter 4 of FY 2025-26 if there has been absolutely no tax deducted at source (TDS) from any of your employees. Under Section 192 of the Income Tax Act, 1961, the statutory obligation to file a quarterly TDS statement arises only when an employer has actually deducted tax. Since your employees’ tax liabilities were completely nullified by the Section 87A rebate (which shields taxable income up to ₹12 lakh under the new regime for FY 2025-26), your net TDS deduction stands at NIL.
This mandate is anchored in the legal phrasing of Section 200(3) of the Income Tax Act, 1961, read alongside Rule 31A of the Income Tax Rules, 1962.
The text of the law explicitly links the requirement of filing a statement to the actual physical act of deducting tax.
1. The Statutory Root: Section 200(3) of the Income Tax Act
The bare text of Section 200(3) reads:
“Any person deducting any sum on or after the 1st day of April, 2005… shall… prepare such statements for such period as may be prescribed…”
Legal Interpretation:
The operative phrase “Any person deducting any sum” establishes a strict conditional prerequisite. If no tax is deducted, the triggering condition for filing a TDS return is not met
The operative phrase “Any person deducting any sum” establishes a strict conditional prerequisite. If no tax is deducted, the triggering condition for filing a TDS return is not met
2. The Procedural Route: Rule 31A of the Income Tax Rules
Rule 31A requires that any person “responsible for deduction of tax” under Section 192, who actually deducts tax, must file Form 24Q. Because Section 192 combined with Section 87A implies an employer is not responsible for deduction if no tax is liable, there is no mandate to file a return when TDS is not applicable.
Summary Checklist for Non-Filing
Because automated systems on the TRACES portal may flag a missing return, taxpayers can submit a “Declaration for Non-Filing of Statement” to confirm that their net TDS was NIL.
If you would like, I can provide the exact step-by-step navigation to file that Non-Filing Declaration on the TRACES portal, or list the specific information needed to draft a quick manual calculation worksheet for your employees’ Form 16. What would be most helpful?
Why You Might Still Want to File (or Take Action)
- Avoid Auto-Generated Income Tax Notices: If you filed Form 24Q in the earlier quarters of FY 2025-26, the Income Tax Department’s TRACES portal expects a continuation for Q4. Leaving it blank without explanation could lead to system-generated non-filing reminders or notices.
- Declaration of Non-Filing on TRACES: To cleanly bypass filing a NIL return without triggering alerts, you should log into your account on the TRACES Portal, navigate to the “Statements/Payments” tab, and submit a “Declaration for Non-Filing of Statement”. This officially informs the department why no return is being filed for Q4.
- Generating Form 16 (Part B): It is important to note that the IT Department auto-generates Part B of Form 16 based on the data submitted in Annexure II of Form 24Q for Q4. If you do not file Q4, you will have to manually compute and issue the salary certificates/Form 16 to your employees, as the system won’t generate them.
- Voluntary Reporting: Many tax experts recommend filing a NIL Form 24Q for Q4 by adding the employee details in Annexure II with “Zero” tax. This builds a comprehensive continuous credit trail, officially logs their salary data, and simplifies compliance tracking.
Summary of Next Steps
If you choose not to file the return, ensure you file the TRACES Non-Filing Declaration before the Q4 submission deadline (May 31, 2026) to prevent any compliance flags.