TDS Explained for Startups: Salaries, Freelancers, Vendor
The Silent Killer of Startup Finances
TDS Explained for Startups might not sound like the most exciting topic.
But let me ask you something real—have you ever found yourself thinking,
Yeh TDS kaun dekh raha hai abhi? Let’s focus on growth first.
That small thought can turn into a massive penalty, a legal notice, or worse—scaring off potential investors.
Because whether you’re paying salaries, freelancers, or vendors, TDS (Tax Deducted at Source) is not optional. It’s law. And startups often don’t realize how deep this hole can go—until it’s too late.
How TDS Almost Killed His Funding Round
Let me take you into the life of Raghav, co-founder of a promising startup based in Gurgaon. His team was growing, revenues touched ₹60 lakhs, and they were this close to securing their first funding round.
He had built a solid team, including two freelance designers from Kolkata and one marketing agency based in Pune.
But during due diligence, an investor’s CA noticed something unusual.
Why haven’t you deducted TDS on ₹8 lakh paid to freelancers and vendors?
No 26Q filed. No Form 16A issued. No trace of TDS compliance.
Within days, Raghav received a notice from the Income Tax Department asking for penalties, interest, and late fees. The investor?
They backed out.
That one oversight cost him ₹15 lakhs in funding.
Why Startups Keep Falling Into the TDS Trap
You’re not alone if TDS feels confusing. Most startup founders aren’t from a finance background. But ignorance isn’t a valid excuse when it comes to law.
Here’s why TDS compliance is often ignored but incredibly risky:
Salaries: TDS under Section 192 must be deducted monthly, based on individual salary slabs.
Freelancers & Consultants: Section 194J or 194C comes into play, and it’s easy to confuse them.
Vendors: From rent to advertising to software subscriptions—every payment has a TDS angle.
Miss a deadline? The IT Department can impose interest, penalties, and even disallow your expense in tax calculation.
So now you’re not just paying a fine—you’re also losing out on deductions.
The 3-Step TDS System That Actually Works
Here’s where most startups go wrong—they think TDS is something to “handle later.” But what if you could set up a simple 3-step system that runs like clockwork?
✅ Step 1: Know What to Deduct
Identify who you’re paying—employee, freelancer, agency, vendor—and under which TDS section they fall.
✅ Step 2: Deduct TDS On Time
As soon as you make the payment or credit it, deduct TDS at the correct rate. No delays.
✅ Step 3: File & Issue Forms
Quarterly TDS returns (Form 24Q for salary, 26Q for others) must be filed. Then issue Form 16/16A to those you paid.
It’s like brushing your teeth—small habit, huge benefit.
And the best part? You don’t have to do it alone.
How Legal Suvidha makes TDS compliance easy for startups
Let’s be honest—you’re busy building your dream. You shouldn’t be decoding Sections 192, 194J, and 26Q on a Sunday evening.
That’s where Legal Suvidha steps in.
We offer a TDS Compliance Solution built especially for startups:
✅ End-to-end support for TDS on salaries, freelancers, and vendors
✅ Timely deductions and deposits with accurate rates
✅ Quarterly return filings with zero errors
✅ Instant Form 16/16A issuance
✅ Compliance-ready records for fundraising or audits
You’ll never miss a deadline, never face a penalty, and never lose sleep over a government notice.
Final Choice: Ignore the Risk or Fix It Today
TDS isn’t “extra work”—it’s the foundation of legal and financial hygiene for your startup.
Now, you’ve got 2 clear options:
❌ Option 1: Ignore it, hope for the best, and wait for that dreaded notice.
✅ Option 2: Let Legal Suvidha manage your TDS, while you manage your vision.
Connect with our Domain Expert or reach out via WhatsApp for instant help.
Phone: 8130645164
Email: [email protected]
Website: www.legalsuvidha.com
Act fast—TDS returns are quarterly. The next deadline is closer than you think.
Startup Compliance Guide (2025 Edition)
