Salary Quarterly TDS Reporting: New Rules For FY 2026-27

From 1 April 2026, the Income Tax Act, 1961 is no longer the governing law for new transactions. Every salary credited, every contractor payment processed, and every professional fee disbursed from that date falls under the Income Tax Act, 2025. For payroll and compliance teams, this is not a cosmetic update — the entire TDS and TCS framework has been restructured. 

The trigger rule is simple: payments or credits up to 31 March 2026 → governed by the old Act (1961). Payments or credits from 1 April 2026 onwards → governed by the new Act (2025). 

This also means two laws run in parallel for a period. Q4 of FY 2025-26 (Jan-Mar 2026) must still be filed under the old Act, using old form numbers, even if you file those returns in May or June 2026. Q1 of Tax Year 2026-27 (Apr-Jun 2026) uses the new Act and new forms. Both sets of returns may be due around the same time in July 2026. 

Sections and Forms 

Salary TDS and non-salary TDS for the period January–March 2026 must be filed on old Form 24Q and Form 26Q using old section numbers - even if you physically file those returns in May or June 2026. The governing law is determined by the pay period, not the filing date. 

Due Dates for the Quarter

• Q1 (Apr–Jun): July 31, 2026
• Q2 (Jul–Sep): October 31, 2026
• Q3 (Oct–Dec): January 31, 2027
• Q4 (Jan–Mar): May 31, 2027 

Correction statements for Form 138 can be filed within two years from the end of the tax year in which the statement was required to be filed. 

Structure of Form 138

Form 138 consists of:

Deductor Details

• TAN, PAN
• Employer details

Challan Details

• TDS deposited
• BSR code, date, amount

Employee-wise Details

• Salary paid
• TDS deducted
• PAN of employee

Annexures

• Annexure I → Quarterly TDS details
• Annexure II → Annual salary details (only in Q4)

How to File Form 138 (Step-by-Step)?

1. Collect employee salary data
2. Compute TDS as per applicable slab
3. Deposit TDS through challan
4. Prepare Form 138 using software/utility
5. Validate using FVU
6. Upload on TRACES / Income Tax Portal
7. Generate acknowledgment

Who Should File Form 138?

• Employer deducting TDS on salary
• Company, firm, LLP, or government entity
• Deductor paying income under salary head

It is mandatory for all salary-paying entities deducting TDS.

Key Changes in Salary TDS Reporting (FY 2026–27)

New Form Numbering System

• Form 24Q → Form 138
• Form 26Q → Form 140

Real-Time Validation

• Errors detected instantly
• Reduced chances of defective returns

Detailed Salary Reporting

• Component-level salary disclosure
• Better tracking of allowances & perquisites

Tech-Driven Filing

• Auto-fill features
• Dropdown-based entries

Stronger Compliance Monitoring

• Increased scrutiny by tax department

Penalties for Non-Compliance 

Complete quarterly TDS calendar for Tax Year 2026–27

15 June 2026

Issue Form 16 (old) for FY 2025–26 salary income. Last deadline under the old Act for this obligation.

31 July 2026 - Q1 deadline

File Form 138 (salary TDS, Apr–Jun 2026) and Form 140 (non-salary). Issue Form 131 within 15 days of filing.

31 October 2026 - Q2 deadline

File Form 138 and Form 140 for Jul–Sep 2026. Update AIS reconciliation early to catch mismatches.

31 January 2027 - Q3 deadline

File Form 138 and Form 140 for Oct–Dec 2026. Collect final investment proofs from employees.

31 May 2027 - Q4 deadline

File Form 138 and Form 140 for Jan–Mar 2027. Issue Form 130 (new Form 16 equivalent) by 15 June 2027.

FAQs

Is Form 24Q still valid in FY 2026–27?

No, it has been replaced by Form 138.

Is there any change in TDS rates?

No major structural change; only reporting format changed.

Who files Form 138?

Employers deducting TDS on salary.

Is Annexure II required every quarter?

No, only in Q4 (annual details).

What happens if Form 138 is not filed?

Penalty, interest and possible scrutiny.