The Central Board of Direct Taxes (CBDT) has released Draft Form No. 138, introducing a structured quarterly statement for deduction of tax at source (TDS) under sections 392 and 393(1) of the Income-tax framework.
The proposed form aims to enhance transparency, standardization, and accuracy in reporting salary payments and specified senior citizen income.
Applicability of Draft Form No. 138
Draft Form No. 138 applies to:
- Employers deducting TDS on salary under section 392
- Payers deducting tax on income of specified senior citizens under section 393(1) [Table Sl. No. 8(iii)]
The form is required to be filed quarterly for the periods ending:
- June
- September
- December
- March
The March quarter filing requires additional annual details.
Structure of Draft Form No. 138
The proposed form is divided into multiple parts and annexures to ensure detailed reporting.
Draft Form No. 138: New TDS Compliance Framework - Download Here
PART A: Deductor Details
This section captures:
- Type of deductor (Government / Non-Government)
- Name and complete address
- PAN and TAN
- Email ID and contact details
- Tax year
- Whether statement filed earlier
- AIN (for Government deductors)
- Details of person responsible for TDS deduction
Notably:
- Non-Government deductors must mandatorily quote PAN.
- Government deductors may mention "PANNOTREQD" where applicable.
PART B - Tax Deducted and Deposited
This section requires reporting of:
- Total tax deducted (including surcharge and Health & Education Cess)
- Interest
- Late filing fee under section 427
- Penalty/other amounts
- Mode of payment (Challan or Book Adjustment)
- BSR Code / Form No. 137 receipt number
- Date of deposit
- Minor head of challan
Government deductors must specify whether payment is through book adjustment , while others must report challan details exactly as reflected on the TIN 2.0/TRACES portal.
Annexure I - Deductee-wise TDS Breakup
Annexure I captures employee/senior citizen-wise details including:
- PAN of deductee
- Name
- Section code (392 or 393)
- Date of payment and deduction
- Amount paid or credited
- Total tax deducted
- Date of deposit
- Reasons for lower or higher deduction
- Certificate number under section 395(1), if applicable
The draft also provides specific section codes:
- 1001 - Government employees (other than Union)
- 1002 - Non-Government employees
- 1003 - Indian Government employees
- 1032 - Specified Senior Citizens
Annexure II - Annual Salary Computation (March Quarter)
To be filed with the March quarter statement , Annexure II provides a comprehensive annual computation of salary including:
- Gross salary under section 16
- Perquisites under section 17
- Profits in lieu of salary
- Exemptions under section 11
- Standard deduction
- House rent allowance (with mandatory landlord PAN if rent exceeds Rs 1 lakh)
- Interest on housing loan (with lender PAN if applicable)
- Deductions under Chapter VIII (Sections 123, 124, 126, 129, 133, 153, etc.)
- Agnipath Scheme deductions
- Tax computation, surcharge, cess
- Rebate under section 156
- Relief under section 157
- Shortfall or excess TDS calculation
This annexure essentially integrates payroll computation, deductions, and reconciliation within the TDS reporting mechanism.
Annexure III - Senior Citizen Pension & Interest Reporting
Applicable to specified senior citizens, Annexure III captures:
- Pension details
- Interest income paid by specified banks
- Chapter VIII deductions
- Rebate under section 156
- Relief under section 157
- Final net tax payable
The form requires classification of senior citizens:
- Code "1" - Below 80 years
- Code "2" - 80 years or above
Key Compliance Implications
1. Increased Data Reporting
The draft form significantly expands the data required from deductors, particularly in the March quarter.
2. PAN Reporting Mandates
Mandatory quoting of:
- Landlord PAN (if rent > Rs 1 lakh annually)
- Lender PAN (if housing loan is from non-financial institution)
- Deductee PAN in all cases
3. Stronger Reconciliation Framework
The form integrates:
- Salary computation
- Chapter VIII deductions
- Tax relief calculations
- TDS reconciliation
- Shortfall/excess computation
This indicates a move toward tighter compliance monitoring and system-based validation.
4. Greater Responsibility on Employers and Banks
Employers must ensure:
- Accurate annual salary computation
- Proper deduction classification
- Correct application of rebates and relief
- Full alignment with challan reporting on TRACES
Banks paying specified senior citizen income must also ensure precise reporting of pension and interest income.
Conclusion
Draft Form No. 138 represents a comprehensive overhaul of quarterly TDS reporting for salary and specified senior citizen income. By integrating detailed salary computation, deductions, tax liability, and reconciliation within the statement itself, the CBDT aims to enhance compliance accuracy and reduce reporting discrepancies.
If implemented in its current form, employers, Government deductors, and banks will need to upgrade payroll and compliance systems to accommodate the expanded reporting framework.
Stakeholders should review the draft carefully and prepare for procedural adjustments once the form is formally notified.
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