The first Form 138 statement, for April to June, is behind us. For many deductors it was also the first time in years that a salary TDS return came back from the File Validation Utility (FVU) with errors nobody had seen before. The Q2 statement, for July to September 2026, is due on 31 October 2026, and the file format has changed again since Q1: Protean released FVU version 1.2 in July with new mandatory fields in the challan record.
This is the checklist I would run through before generating the Q2 file for a client.
What changed: 24Q to Form 138
Form 138 replaced Form 24Q for salary paid or credited from 1 April 2026 (tax year 2026-27), when the Income-tax Act, 2025 and the Income-tax Rules, 2026 came into force. The quarterly cadence and the annexure logic are the same; the references are not.
| Up to 31 March 2026 (1961 Act) | From 1 April 2026 (2025 Act) | |
|---|---|---|
| Quarterly salary TDS statement | Form 24Q | Form 138 |
| TDS on salary | Section 192 | Section 392 |
| Obligation to file the statement | Section 200(3) | Section 397(3)(b) |
| Rule prescribing the form | Rule 31A | Rule 219 |
| Salary TDS certificate | Form 16 | Form 130 |
| Section code in the file (salary, non-government) | 92B | 1002 |
| Fee for late filing | Section 234E | Section 427 |
| Year | Financial year | Tax year |
Due dates are unchanged: 31 July, 31 October and 31 January for Q1 to Q3, and 31 May after the tax year for Q4. The late filing fee under section 427 is ₹200 a day while the failure continues, capped at the TDS amount, and it has to be paid before the statement is filed.
The computation itself has not moved: the slabs, standard deduction and rebate for 2026-27 are the same as for 2025-26. What has changed is the paperwork around it.
The pre-filing checklist for Q2
1. Every challan, with BSR code and serial number. List each challan deposited for July, August and September salary: BSR code (7 digits), challan serial number, date of deposit, and the split into tax, interest, fee and penalty. In the Form 138 file a challan has only these four buckets; surcharge and cess are folded into tax.
2. Map every employee to a challan. Each deductee row sits directly under the challan that paid it. The tax deposited across the rows under a challan must not exceed what that challan can cover. If one challan was used for two months, check the mapping row by row.
3. Reconcile totals at three levels. For each challan, the total deposited must equal tax + interest + fee + penalty. The challan's "total tax deducted" and "total tax deposited as per deductee annexure" must equal the sums of its deductee rows. The batch header's total must equal the sum of all challan totals. And for salary, tax deposited must equal tax deducted on every row.
4. PANs, including the responsible person's. Employee PANs must be in the standard format in capitals. Where an employee has no valid PAN, use PANAPPLIED, PANINVALID or PANNOTAVBL with remark C and tax at the higher rate (at least 20%). Don't forget the responsible person's PAN in the batch header; lower-case letters there are enough to fail the FVU.
5. Dates inside the quarter. From FVU 1.2, every deductee's date of payment must fall within the quarter and tax year of the statement. For Q2 that means 1 July to 30 September 2026. Salary for September paid on 1 October belongs in Q3, not Q2. Dates of deduction and deposit are mandatory wherever tax is more than zero.
6. The two new challan fields. The July 2026 format update added Interest Allocation and Others Allocation to every challan record, and both are now mandatory. Interest Allocation is the challan's interest; Others Allocation is the value in the penalty field. Use 0.00 where there is none. Files from software built for the Q1 format leave these empty and fail.
7. Amounts and format. Amounts carry exactly two decimals. Challan amounts and the batch total are whole rupees written with .00 (9300.00, not 9300 or 9300.50). The file is plain ASCII, one record per line, fields separated by carets, in the order FH (file header), BH (batch header), then each CD (challan) followed by its DD (deductee) rows.
8. Latest FVU and the right CSI file. Validate with FVU 1.2, not the version you used in July. Download the Challan Status Inquiry (CSI) file for the client's TAN from the e-filing portal (e-Pay Tax → Challan Status Inquiry) for the period covering the challan dates. The deductor name in the file must match the name registered against the TAN.
Corrections. Once submitted, a Form 138 statement cannot be edited; it can only be revised through a correction statement, which may be filed within two years from the end of the tax year in which the statement was due. For a Q2 2026-27 statement that runs to 31 March 2029. It is still cheaper to get it right the first time.
Common FVU errors and how to fix them
| Error | What it means | Fix |
|---|---|---|
| T-FV-4009 | Invalid employee PAN | Correct it from the PAN card, or use PANAPPLIED / PANINVALID / PANNOTAVBL with remark C |
| T-FV-2235 | Invalid PAN of the responsible person | Batch header field 59: valid PAN, in capitals |
| T-FV-2127 | Invalid count of salary detail records | The format says "no value", but FVU 1.1 wanted 0 in batch header field 49 for Q1 to Q3. Put 0 |
| T-FV-2090 | Gross total income as per salary details is for Q4 only | Leave batch header field 50 empty in Q1 to Q3, not even 0.00 |
| T-FV-1041 | CSI file is mandatory for non-nil challans | Download the CSI for the correct TAN and period; a CSI for another TAN also ends here |
| T-FV-3173 | TAN and TAN name do not match the CSI | Use the deductor name exactly as registered against the TAN |
| T-FV-6381 | At least one deductee record is required | Usually follows another batch-level error such as an invalid PAN; fix those first |
Two more failures to expect in Q2 are the empty allocation fields (point 6) and a date of payment outside the quarter (point 5). The FVU's wording can change between versions, so read its error report rather than relying on the code alone.
Transition: FY 2025-26 stays on the old forms
The applicable form follows the date of payment or credit, not the date of filing. Everything paid up to 31 March 2026, including Q4 of FY 2025-26 that was filed in May 2026, is reported in Form 24Q with the old section codes, and the salary certificate for FY 2025-26 is Form 16. Any correction to those statements is a correction to the 24Q statement. Using the old section codes in a statement for tax year 2026-27 triggers validation errors.
Q4 of tax year 2026-27 will also carry Annexure II (and, for specified banks, Annexure III for specified senior citizens under section 393(1)). Protean lists the Q4 file format as "expected to be released soon", so expect another change before May 2027.
A worked example: one challan's totals
A client deducts tax from three employees' July salary, paid on 31 July 2026: ₹3,100, ₹4,500 and ₹1,700. One challan of ₹9,300 is deposited on 7 August 2026, with no interest, fee or penalty.
| Challan field | Value |
|---|---|
| Tax | 9300.00 |
| Interest | 0.00 |
| Fee | 0.00 |
| Penalty | 0.00 |
| Total deposited (tax + interest + fee + penalty) | 9300.00 |
| Number of deductee rows under the challan | 3 |
| Total tax deducted as per deductee annexure | 9300.00 |
| Total tax deposited as per deductee annexure | 9300.00 |
| Interest Allocation | 0.00 |
| Others Allocation | 0.00 |
Each of the three deductee rows has a date of payment of 31072026 (inside Q2), section code 1002, tax deducted equal to tax deposited, and a date of deposit of 07082026.
Now suppose the same challan had carried ₹150 of interest. Interest becomes 150.00, the total becomes 9450.00, and Interest Allocation must also be 150.00. The challan total has to cover the tax deposited by its deductees plus the allocations: 9,300 + 150 = 9,450, which it does. Leave Interest Allocation empty and the FVU 1.2 file fails, even though every rupee is accounted for.
Tools
A free browser-based checker for the Form 138 file is available at https://www.hivepayroll.co.in/form-138-file-validator/ (the file is not uploaded). The official FVU with the CSI file still has the final word.
The author is the founder of HivePayroll, payroll software for Indian companies that calculates PF, ESI, PT, LWF and TDS. He writes about payroll compliance for employers and practitioners.
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