Introduction

In practical TDS compliance, it is common for deductors to face situations where excess tax is paid in one quarter or under one section. A frequent question that arises is:

👉 Can excess challan balance from Form 24Q be adjusted in Form 26Q?

The answer is YES — but with conditions. Let’s understand this in detail from a compliance and practical filing perspective.

Understanding Form 24Q and 26Q

• Form 24Q: TDS return for salary payments under Section 192
• Form 26Q: TDS return for non-salary payments (like professional fees, contractor payments, etc.)

Even though both forms relate to different sections, the challan (ITNS 281) is deposited against TAN, not a specific form.

Can Excess Challan of 24Q Be Used in 26Q?

✅ Yes, it is allowed

Excess TDS paid in one return (e.g., 24Q) can be utilized in another return (e.g., 26Q), subject to the following:

Key Conditions for Adjustment

1. Same TAN

The challan must be deposited under the same TAN.

2. Same Nature of Payment (Critical Point)

• Challan has a section code (minor head + section mapping)
• Adjustment is generally allowed within compatible sections

👉 Practically, TRACES allows cross-utilization, but mismatch may trigger notices

3. Unconsumed Challan Balance

Only the unused portion of challan can be utilized.

Example:

• Paid TDS: ₹1,00,000 in 24Q
• Utilized: ₹75,000
• Balance: ₹25,000
  👉 This ₹25,000 can be used in 26Q

4. Correct Reporting in Return

While filing 26Q:

• Use same challan details (BSR, Date, Serial No.)
• Allocate the remaining amount properly

Important Practical Risks ⚠️

❗ Section Mismatch Issues

If challan was deposited under salary (192) and used in 194J/194C:

• May lead to justification report mismatch
• Possible TRACES defaults

❗ Short Deduction Notices

Improper mapping can trigger:

• Short deduction
• Interest liability (Section 201(1A))

❗ Difficulty in Correction

Once wrongly utilized:

• Requires correction return
• Time-consuming reconciliation

Best Practices for CA Firms & Deductors

✔ Always plan challan deposit section-wise
✔ Avoid unnecessary cross-adjustments
✔ Maintain challan utilization working sheet
✔ Reconcile with TRACES Justification Report before filing
✔ Use cross-utilization only when necessary

Expert Tip 💡

Even though the system technically allows cross-utilization, from a compliance perspective:

👉 It is safer to use challan within the same section wherever possible.

Conclusion

Yes, excess challan of Form 24Q can be used in Form 26Q, provided:

• TAN is same
• Challan balance is available
• Proper reporting is done

However, due to sectional differences and possible scrutiny, such adjustments should be handled carefully with proper documentation.

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• TDS mismatches
• TRACES defaults
• Complex challan adjustments

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