Businesses and other tax deductors filing their first-quarter and TCS returns for Tax Year (TY) 2026-27 will have to comply with a new reporting framework under the Income-tax Act, 2025. The due date for filing the Q1 quarterly statements is July 31, 2026, but this year’s filing comes with significant procedural changes, including new return forms and revised section codes.
The Income Tax Department has already enabled the new quarterly forms on the e-filing portal, marking the transition from the Income-tax Act, 1961 to the new legislation that came into force on April 1, 2026.
What has changed for Q1 TDS/TCS filing?
The biggest change is the replacement of the existing quarterly return forms.
Under the new framework:
- Form 138 replaces Form 24Q for TDS deducted from salary.
- Form 140 replaces Form 26Q for TDS on non-salary payments.
- Form 143 replaces Form 27EQ for Tax Collected at Source (TCS).
The due date for filing these Q1 statements remains July 31, 2026 for the April-June quarter.
The department has also clarified that TDS obligations are determined by the date of payment or credit. Transactions on or after April 1, 2026 are governed by the Act, 2025, while earlier transactions continue under the Income-tax Act, 1961.
Revised section codes must be used
Apart from new forms, deductors must report transactions using the revised section codes prescribed under the new law.
Some of the key changes include:
|
Nature of payment |
Earlier section |
New section |
| Salary | 192 | 1602 |
| Commission or brokerage | 194H | 1606 |
| Contractor payments | 194C | 1623 |
| Rent (land/building) | 194I(a) | 1609 |
| Rent (plant and machinery) | 194I(b) | 1610 |
| Professional or technical fees | 194J | 1627 |
| Purchase of goods | 194Q | 1631 |
| Partner’s salary or commission | 194T | 1667 |
| TCS on sale of scrap | 206C(1) | 1073 |
The Income Tax Department has cautioned that using the old section numbers for transactions covered by the new Act may lead to system validation errors while filing quarterly statements.
What should deductors do before filing?
Before filing the Q1 returns, businesses should ensure that their payroll software, accounting systems and TDS utilities have been updated to reflect the new form numbers and section codes.
Deductors should also reconcile tax deducted or collected with challan payments before uploading the return. Where a single challan covers under multiple sections, the amounts should be appropriately allocated to the relevant return forms to avoid mismatches during processing.
The Income Tax Department’s Form 138 user manual also requires deductors to use the latest Return Preparation Utility (RPU), generate a validated file and upload it through the e-filing portal using their TAN credentials.
Accurate reporting assumes greater importance during the first year of transition to the Income-tax Act, 2025. Errors in section codes, incorrect mapping of deductions or mismatches between challans and returns could result in defective filings, delayed TDS credits or notices from the tax department.