TDS Returns Can Now Be Filed Directly on TRACES
A major filing change from Q2 of FY 2026-27 makes short TDS returns faster and simpler
A significant change is being introduced in the TDS return filing process from Q2 of FY 2026-27. TDS statements can now be filed directly online through the TRACES portal itself, making the compliance process considerably simpler, particularly for deductors having a small number of deductee entries. Earlier, the usual process involved preparing and filing the TDS statement through the prescribed mechanism, followed by its transfer to TRACES for processing. The new online facility seeks to bring the return preparation, validation and submission process directly onto the TRACES platform.
How the new process works
The process is broadly as follows: Step 1 – Select the appropriate TDS Form The deductor first selects the applicable TDS statement/form for the relevant quarter. Step 2 – Import challans The available challans can be imported directly from the portal. If a particular challan has not yet been updated or is not available for import, the facility also permits the challan details to be entered manually. Step 3 – Enter deductee details The deductee-wise details can then be entered directly on the portal. For multiple deductees or larger data sets, a Bulk Upload facility is also available, making it easier to upload several entries together. Step 4 – Map challans with deductees The next step is to map the relevant challan with the corresponding deductee entries. This is an important stage because the tax deducted and deposited has to be correctly matched with the respective deductee records. Step 5 – Validation and confirmation After entering the required information, the statement is subjected to validation. The deductor can review the information and confirm the return before proceeding further. Step 6 – E-Verification The final step is electronic verification. The statement can be verified through Aadhaar OTP or DSC of the authorised person, as applicable.
Why this is useful
For deductors having only a few TDS entries, this facility can be particularly useful. Instead of going through a longer preparation-and-transfer cycle, the deductor can enter the required information directly on TRACES, validate it and complete the filing process online. The major advantages include:
Direct online filing through TRACES
No separate preliminary filing process
Direct challan import
Manual challan entry where required
Bulk upload facility for multiple deductees
Online validation before submission
Aadhaar OTP/DSC-based e-verification
Potentially faster processing for short and simple TDS statements
A practical change for tax professionals
For tax professionals and deductors handling a large number of small TDS statements, the change could save considerable time. A short statement involving only a few challans and deductees may no longer require the same workflow traditionally followed for preparing and submitting a TDS return. However, while the filing mechanism has become simpler, the underlying responsibility remains unchanged. The deductor must ensure that the challan details, PAN of deductees, amount of payment, tax deducted, date of deduction and other particulars are correctly reported. A simpler filing interface does not mean simpler consequences for an incorrect statement.
The bigger picture
The move is another step towards making tax compliance increasingly portal-based and real-time. Rather than merely acting as a repository for processed TDS statements, TRACES is increasingly becoming an active compliance platform. For small deductors, this can be particularly convenient. Less downloading, less uploading, less waiting—and potentially a much quicker TDS return filing experience. For Q2 of FY 2026-27 onwards, deductors should therefore check whether the new online filing facility is available for the relevant form and use the facility where appropriate.
