A contractor's invoice is paid, TDS is deducted, and the accounts team prepares the monthly tax payment. Then a new choice appears on the Income Tax e-Filing portal: Income-tax Act, 1961 or Income-tax Act, 2025? Picking the wrong option can create an avoidable challan mismatch, even if the bank successfully takes the money.
For an ordinary TAN-based TDS payment, the short answer is this: use Challan ITNS 281N for Tax Year 2026–27 onward and ITNS 281 for TDS relating to FY 2025–26 or earlier. Use the official e-Pay Tax portal Official ↗. The challan depends on when TDS became deductible, not simply the day you are paying it.
This guide covers the right challan, the complete online process, payment deadlines, an interest example and the fixes to try if the money has been deducted from your bank but the challan or deductee credit does not match.
2026 transition rule: If professional fees were credited to the supplier in March 2026 but paid in April 2026, the earlier credit generally determines the applicable TDS law. The corresponding TDS belongs to the 1961 Act and should be deposited using ITNS 281, even if you make the payment after 1 April 2026. Income Tax Department — TDS Compliance FAQs Official ↗.
Quick answer: Challan 281 vs 281N
| What the TDS relates to | Governing law | Correct challan | Select on portal |
|---|---|---|---|
TDS arising in FY 2025–26 (up to 31 March 2026) | Income-tax Act, 1961 | ITNS 281 | 1961 Act and relevant Assessment Year, normally AY 2026–27 |
TDS arising from 1 April 2026 (Tax Year 2026–27 onward) | Income-tax Act, 2025 | ITNS 281N | 2025 Act and the relevant Tax Year |
Old-period TDS paid late during 2026–27 | Income-tax Act, 1961 | ITNS 281 | The relevant earlier Assessment Year |
Specified PAN-based challan-cum-statement transactions from TY 2026–27 | Income-tax Act, 2025 | Form 141, not ordinary 281N | 2025 Act → Form 141 under PAN login |
The distinction is confirmed in the department's ITNS 281N FAQs Official ↗ and Tax Payments FAQs Official ↗.
Three things to check before paying
Correct Act
1961 or 2025
Determined by the date TDS was required to be deducted
Correct tax period
AY or Tax Year
Older years use AY; new Act uses Tax Year
Correct deductee group
Company / non-company
Separate challans for different categories
Before paying TDS online: keep these details ready
An incorrect date, TAN or deductee category can take longer to fix than the payment itself. Match the challan against your payroll or vendor TDS register before you begin.
- TAN of the person or business deducting tax (for ordinary TAN-based deposits), plus access to the registered mobile number for verification.
- Tax period and Act: whether the underlying deduction belongs to FY 2025–26 or Tax Year 2026–27 onward.
- Recipient category: company or other-than-company; resident or non-resident where requested.
- Correct payment nature or section/table item, based on salary, rent, contractor fees, professional services, interest, etc.
- TDS amount and separately calculated surcharge, cess, late-deposit interest, or other applicable components.
- Banking access for the payment mode you intend to use.
For example, a private limited company paying professional fees to an individual consultant uses the non-company deductee category, even though the entity making the payment is a company. The choice describes the recipient, not the deductor.
Do not confuse the major head with the minor head. Under ITNS 281N, major head 0020 identifies corporation tax and 0021 identifies income tax other than companies. Minor head 200 is the normal TDS/TCS payable category, while 400 is used for an outstanding TDS/TCS regular-assessment demand. See the official Challan 281N FAQs Official ↗.
How to pay TDS online using Challan 281 or 281N
You can create the challan after logging in with your TAN, or use the pre-login e-Pay Tax facility with TAN and OTP. The exact labels shown may vary slightly as the portal is updated.
TDS e-Pay Tax payment process
-
Open e-Pay Tax
Visit incometax.gov.in Official ↗; sign in with TAN and open e-File → e-Pay Tax, or choose the pre-login e-Pay Tax quick link
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Choose the right Act
Select the Income-tax Act, 1961 for earlier TDS or the 2025 Act for Tax Year 2026–27 onward
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Create the payment
Click New Payment and select Pay TDS/TCS (or the appropriate outstanding-demand tile)
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Verify recipient details
Select company or non-company deductee, residency category where required, tax year and payment nature
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Enter tax breakup
Allocate the amount correctly across applicable section codes and tax/interest/other fields
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Choose payment mode
Select an available bank or payment gateway, confirm the preview and complete payment
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Download challan
Save the successful challan receipt and CIN, then reconcile it with your TDS records
Step 1: Open the official portal
Visit Income Tax e-Filing Official ↗. For a logged-in deductor, the route is e-File → e-Pay Tax → select the Act → New Payment. If paying before logging in, use the e-Pay Tax quick link, enter TAN and a mobile number and complete OTP verification. Do not enter your login credentials through links received in unsolicited messages.
Step 2: Select the Act and period carefully
The portal supports the old and new tax laws in parallel. For a payment belonging to March 2026, use the 1961 Act and the applicable AY even if the cash is leaving your account in October 2026. For TDS required to be deducted in September 2026, select the 2025 Act and Tax Year 2026–27.
Step 3: Choose deductee type and nature of payment
Select the category corresponding to the person whose payment was subject to TDS. You must also select the applicable table entry or section code. Under ITNS 281N, the portal supports up to 20 section codes per challan under minor head 200, but company/non-company and resident/non-resident deductees cannot be mixed in the same challan. This differs from advice to always make one challan for every single section code. Official FAQ Official ↗.
The 2025 Act also reorganises TDS provisions: salary withholding is principally under Section 392, while many other deductions are covered by tables under Section 393. Do not blindly enter a 1961 Act section such as 194C or 194J for new-Act transactions. Use the new portal's current section or table mapping. Tax Payments FAQs Official ↗.
Step 4: Add amounts and review the breakup
Reconcile the total against your TDS ledger and the deductions made from employees or vendors. If tax is overdue, calculate interest separately rather than disguising it as additional tax deducted. Check that the amounts, year, TAN and deductee category agree with the original deduction records before clicking Pay Now.
Step 5: Choose payment method
The official e-Pay Tax facility supports multiple methods, subject to available banks, gateways and transaction restrictions.
| Method | Practical note |
|---|---|
| Net banking | Use an authorised bank shown on the portal |
| Debit card | Availability depends on the supported banking route |
| Payment gateway | May offer UPI, credit card, debit card or net banking; compare convenience charges |
| NEFT/RTGS | Follow the bank mandate and beneficiary details generated by the portal |
| Pay at bank counter | May offer cash, cheque or DD, subject to eligibility and limits |
Payment gateway fees may apply in addition to the tax. See the department's e-Pay Tax Payment Modes guide Official ↗.
Step 6: Save CIN and confirm payment status
When you create an unpaid challan, the portal assigns a CRN (Challan Reference Number). After successful payment, a CIN (Challan Identification Number) is generated. The challan receipt contains important payment details, including the bank/BSR code, deposit date, amount and challan serial number.
Under TAN login, review e-Pay Tax → Payment History and download the challan receipt. Save a copy in a folder organised by period, section and deductee type. You can also download a CSI (Challan Status Inquiry) file for TDS-statement preparation. An unpaid CRN is not proof that the tax was deposited. e-Pay Tax FAQs Official ↗; general payment FAQs Official ↗.
TDS payment due dates in 2026
| Situation | General deadline | Important qualification |
|---|---|---|
Non-government deductor: April–February | 7th of the following month | Check statutory exceptions |
Non-government deductor: March | 30 April | Applies even when March 2026 tax is paid under old Act |
Government deductor paying with challan | Generally 7th of the following month | March 2026 with-challan due 7 April 2026 |
Government deductor paying without challan | Same day as deduction | Specific government remittance method |
Specified PAN-based challan-cum-statement cases | Within 30 days from month-end | Form 141 applies to covered transactions in TY 2026–27 onward |
The Income Tax Department states that Rule 218 of the Income-tax Rules, 2026 retains the general deposit deadlines from the prior rules. Official Tax Payments FAQs Official ↗.
Example: A private company deducts TDS on a vendor's bill on 15 September 2026. Its ordinary TAN-based TDS is generally due by 7 October 2026, using ITNS 281N for Tax Year 2026–27. If it deposits the tax on 8 October, late-deposit interest may apply even though the payment is only one day past the deadline.
How is interest calculated on late TDS payment?
Missing the deposit deadline can produce interest for a month or part of a month, measured from the deduction date rather than only from the day after the payment deadline.
| Default | Interest rate | Period counted |
|---|---|---|
TDS not deducted when required | 1% per month or part thereof | Date deduction was required through actual deduction |
TDS deducted but deposited late | 1.5% per month or part thereof | Date of deduction through actual payment |
These rates continue under Section 398(3)(a) of the Income-tax Act, 2025. Official transition FAQs Official ↗.
Example: payment just one day after the due date
Assume a company deducts ₹50,000 on 28 June 2026 and deposits it on 8 July 2026. The ordinary due date was 7 July. Because the period from deduction to deposit touches June and July, two months or parts thereof are counted for this example.
Interest = ₹50,000 × 1.5% × 2 = ₹1,500.
Total cash payable for the deducted tax and illustrated interest becomes ₹51,500, ignoring any other applicable component. The tax itself remains ₹50,000, while ₹1,500 should be recorded as interest. Calculate each real transaction using its actual deduction and payment dates.
Late filing of the TDS statement is a different default from late payment of TDS. Older-law statements can attract a separate ₹200-per-day fee, subject to the statutory cap, under Section 234E. Do not combine that fee automatically with the deposit-interest calculation. Income Tax Department guide to late TDS statements Official ↗.
When to use Form 141 instead of TAN-based Challan 281N
Not every TDS payment should be made using the ordinary TAN challan. From Tax Year 2026–27, specified transactions previously reported under Forms 26QB, 26QC, 26QD and 26QE are consolidated into Form 141, a PAN-based challan-cum-statement.
| Transaction under applicable conditions | New-Act Form 141 schedule |
|---|---|
| Specified rent paid by an individual or HUF | Schedule A |
| Purchase/transfer of specified immovable property | Schedule B |
| Specified contractor/professional payments by individuals or HUFs | Schedule C |
| Certain virtual digital asset transfers by individuals or HUFs | Schedule D |
| Specified immovable-property transfer involving a non-resident deductee | Schedule E, introduced from 1 October 2026 |
How to access: PAN login → e-File → e-Pay Tax → Income-tax Act, 2025 → New Payment → Form 141. The form generally combines deduction reporting and payment; its usual deadline is within 30 days of the end of the deduction month. Verify the exact transaction category before proceeding. Official Form 141 FAQs Official ↗.
Buying a property or making a prescribed PAN-based deduction? Check Form 141 first. Paying an ordinary TAN challan and assuming it replaces the required challan-cum-statement can leave the reporting step incomplete.
Paid TDS, but the credit is not showing: what to check
Depositing TDS and filing the TDS statement are two separate compliance steps. A paid challan confirms the deposit, but the recipient's tax credit also depends on correct reporting, including PAN, deductee amount and challan mapping.
- Check payment status: Confirm that Payment History shows a paid challan with a CIN. Compare it with the bank debit.
- Download CSI: Under TAN payment history, obtain the challan file for the relevant payment-date range, where available.
- Check the tax period: Do not map a 1961 Act March 2026 payment into a 2025 Act tax-year statement by mistake.
- Match the recipient: Verify the deductee's PAN, resident/non-resident classification and company/non-company category.
- Check statement status: Verify that the applicable TDS statement was filed and processed without defaults.
- Reconcile differences: Compare the statement, your books and the recipient's tax-credit records before deciding whether a correction statement is necessary.
For an older-period statement, see TaxQue's guide to filing TDS returns. For issues where the recipient's credit is missing, see the TDS mismatch notice guide.
How to correct a wrong TDS challan
You may discover a wrong tax period, incorrect deductee type or section code only while preparing the return. Don't assume that every mistake can be changed through the general PAN challan-correction screen.
- Identify the error exactly: TAN, Act, tax period, section code, major head, minor head or amount.
- Locate the paid challan: Keep the CIN, date, receipt and payment proof ready.
- Check TRACES: For ITNS 281N correction through TAN, the Income Tax Department directs users to the TRACES portal. Some errors may require help from the assessing officer.
- Update the TDS statement if necessary: Once the corrected challan can be matched, complete the appropriate statement correction procedure.
- Avoid a duplicate deposit without checking first: A second payment is not automatically the right answer to a mismatch.
The department specifically states that the normal challan-correction tool on the e-Filing portal is a PAN-based facility and that TDS/TCS challans should be corrected via TRACES or the Assessing Officer. Official Challan Correction FAQs Official ↗.
Five mistakes businesses can avoid before clicking Pay Now
- Using today's date to select the Act: An overdue March 2026 deduction does not become new-Act TDS merely because it is deposited after April.
- Selecting based on the deductor: A company paying an individual does not select company deductee solely because the company is making the deposit.
- Confusing CRN with CIN: A CRN may be generated without completing the tax payment.
- Mixing categories in one 281N challan: Different deductee company classes and resident/non-resident groups require separation.
- Ignoring the TDS statement: A paid challan must still be linked to the correct reporting records for the deducted tax to reach the recipient's account.
TDS payment checklist for accountants and business owners
- ○ I confirmed when the TDS obligation arose.
- ○ I selected Income-tax Act, 1961 or 2025 correctly.
- ○ I selected the right AY or Tax Year.
- ○ I verified TAN and the deductee category.
- ○ I selected the proper section/table item and payment type.
- ○ I reconciled tax and interest against the ledger.
- ○ I reviewed the payment confirmation and saved the CIN.
- ○ I recorded the challan in the TDS register for the correct period.
- ○ I arranged the applicable TDS statement or Form 141 filing.
Final takeaway: payment is only half the job
For TDS deducted from April 2026 onward, the new Challan ITNS 281N makes payment easier when the appropriate Act, Tax Year and deductee details are selected correctly. But the task is not complete when the bank account is debited: you still need a paid CIN, a clean challan reconciliation and the applicable TDS statement.
If your business deals with monthly payroll, vendors, professional fees or multiple deductee types, a simple monthly checklist helps prevent late deposits and mismatch demands. TaxQue's TDS return filing service can help with challan reconciliation, periodic filings and correction work.
Explore TaxQue's TDS filing service
Official sources and further reading
- Income Tax Department — Create Challan through TAN Login / ITNS 281N FAQs Official ↗
- Income Tax Department — Tax Payments FAQs for 1961/2025 transition Official ↗
- Income Tax Department — TDS Compliance FAQs Official ↗
- Income Tax Department — Tax Payment Modes guide Official ↗
- Income Tax Department — Form 141 FAQs Official ↗
- Income Tax Department — Challan Correction FAQs Official ↗
Editorial verification: 18 October 2026. This is general educational information. Follow the exact form and any updated statutory instructions applicable to your transaction before making payment.
