CA Alok Kumar

Form 138 is the quarterly TDS return for salary deductions under Section 392 of the Income Tax Act 2025, effective from Tax Year 2026-27 (1 April 2026). It replaces the erstwhile Form 24Q that was used under the Income Tax Act 1961. The form is filed by employers (companies, firms, government bodies, individuals deducting salary TDS) and specified banks (for senior citizen pension/interest). It uses numeric payment codes — Code 1001 for regular salary, Code 1002/1003 for specified scenarios, and Code 1004 for EPF premature withdrawal. After filing Form 138, employers must generate Form 130 (which replaces Form 16) through the TRACES portal — self-generated certificates are no longer valid. The due dates remain unchanged: Q1 by 31 July, Q2 by 31 October, Q3 by 31 January, Q4 by 31 May.

Form 140 is the quarterly TDS return for all non-salary payments to residents under Section 393(1) of the Income Tax Act 2025, replacing the erstwhile Form 26Q. It covers the widest range of TDS deductions — contractor payments, professional fees, rent (land/building/plant & machinery), commission/brokerage, interest, dividends, insurance commission, e-commerce payments, purchase of goods, crypto/VDA, partner remuneration, and more. Each payment type now has a specific numeric code (1005–1038 and 1058–1067) that must be quoted instead of old section numbers. For example, professional fees uses Code 1027 (not "194J"), contractor uses Code 1023/1024 (not "194C"). After filing, Form 131 (replacing Form 16A) is generated through TRACES.

Form 144 is the quarterly TDS return for all payments to non-residents (NRIs, foreign entities) under Section 393(2) of the Income Tax Act 2025, replacing the erstwhile Form 27Q. It covers royalty, fees for technical services (FTS), interest, rent, capital gains, salary paid to NRIs, and all other payments to non-residents. Uses payment codes 1039–1057, plus applicable cross-codes. DTAA rates can be applied where the non-resident provides a Tax Residency Certificate (TRC) and Form 10F (now renumbered). A significant change under the new Act: for NRI property transactions, the buyer can now use their PAN instead of obtaining a separate TAN, which simplifies the process considerably.

Form 141 is the unified challan-cum-TDS statement under the Income Tax Act 2025 that consolidates all four PAN-based forms into one. It replaces Form 26QB (property purchase TDS), Form 26QC (rent TDS by individual/HUF), Form 26QD (contractor/professional payment TDS by individual/HUF), and Form 26QE (VDA/crypto TDS). Form 141 has four schedules: Schedule A for rent by individual/HUF, Schedule B for immovable property transfer, Schedule C for contractor/professional payments, and Schedule D for virtual digital assets. Each Form 141 filing can only cover one type of transaction — separate forms must be filed for different transaction categories. It is filed on incometax.gov.in under the Income Tax Act 2025 e-filing section.

Most TDS rates remain the same under the Income Tax Act 2025. The key changes are: (1) TDS on rent paid by individual/HUF (erstwhile Section 194IB) is reduced from 5% to 2% — providing significant relief for individual tenants and small landlords. (2) TDS on e-commerce operator payments (erstwhile Section 194O) is sharply reduced from 1% to 0.1% — major relief for sellers on platforms like Amazon and Flipkart. (3) Manpower supply services are now explicitly included under contractor TDS provisions. (4) Section 206AB (higher TDS on specified persons / non-filers) has been removed from the new Act. (5) For NRI property transactions, the buyer can use PAN instead of TAN. (6) Form 15G/15H are replaced by a single age-agnostic Form 121 with a 26-character UIN. (7) CBDT guidelines are now explicitly binding on all deductors under Section 400(2).

The transition depends on when the payment or credit occurs (whichever is earlier). All payments/credits up to 31 March 2026 are governed by the Income Tax Act 1961 — use old forms (24Q, 26Q, 27Q, 27EQ) with old section numbers. All payments/credits from 1 April 2026 are governed by the Income Tax Act 2025 — use new forms (138, 140, 144, 143) with numeric payment codes. During the transition year, deductors must file both: Q4 FY 2025-26 return using old forms (due 31 May 2026) and Q1 Tax Year 2026-27 return using new forms (due 31 July 2026). ERP systems, payroll software, and accounting packages must be updated with new section references (392, 393, 394) and payment codes (1001–1067). CA Alok Kumar provides complete transition support including vendor master updates and system configuration.

Form 121 is the unified nil-TDS declaration under the Income Tax Act 2025, replacing both Form 15G (for individuals under 60) and Form 15H (for senior citizens above 60). The key innovation is that Form 121 is age-agnostic — one form for all resident individuals whose total income is below the taxable limit. Each Form 121 receives a 26-character Unique Identification Number (UIN) from the payer entity, enabling better tracking and preventing missing declarations during assessments. This is prescribed under Section 393(6) of the new Act. Payers must allot the UIN and maintain records. The form is filed by the payee (recipient) and submitted to the payer (bank, company, etc.) who would otherwise deduct TDS.

The penalty framework under the Income Tax Act 2025 largely continues from the old Act with one major improvement — minor procedural defaults are decriminalized. Late filing fee: ₹200 per day (max: total TDS amount in return). Interest: 1% per month for late deduction + 1.5% per month for late deposit. Penalty for incorrect return: ₹10,000 to ₹1,00,000. Prosecution for non-deposit of deducted TDS: 3 months to 7 years imprisonment (unchanged). Expense disallowance under Section 35(b) (new Act equivalent of 40(a)(ia)): 30% of payment disallowed if TDS not deducted or not deposited by return filing due date. The decriminalization provision means that honest technical errors (wrong payment code, clerical mistakes) will attract monetary penalties rather than criminal prosecution — a significant relief for businesses.

Under the old Income Tax Act 1961, income earned in Financial Year (FY) 2025-26 was assessed in Assessment Year (AY) 2026-27, creating a confusing dual-year system. Under the Income Tax Act 2025, this is replaced by a single "Tax Year" concept. Income earned in Tax Year 2026-27 (April 2026 to March 2027) is filed and assessed in Tax Year 2027-28. The Tax Year equals the Financial Year — it is a terminology change, not a structural change. However, all TDS returns, challans, certificates, and documentation filed from 1 April 2026 must reference "Tax Year" instead of "FY/AY." This simplification reduces confusion in litigation and documentation.

TDS return filing fees vary based on the number of deductees, type of return (Form 138/140/144), and complexity of transactions. CA Alok Kumar offers TDS filing services starting from ₹1,000 onwards per quarter for small businesses, with volume-based pricing for larger deductors. This includes challan reconciliation, payment code mapping, return preparation and filing, and Form 130/131 certificate generation. TDS notice reply, correction returns, and litigation services are priced separately based on complexity. Contact us for a customized quote — WhatsApp +91-9818167102 or email alok@skmehta.co.in.