TDS Return Filing 2026: New Forms, Codes for Q1 Due July 31

Deductors must report transactions using the revised section codes prescribed under the new law. The department warned that using old section numbers for transactions covered by the new Act could trigger system validation errors during filing.

Before submitting Q1 returns, businesses should update payroll software, accounting systems and TDS utilities to reflect the new form numbers and section codes. Deductors also need to reconcile tax deducted or collected with challan payments before uploading the return. Where a single challan covers deductions under multiple sections, the amounts should be allocated to the relevant return forms to avoid processing mismatches.

The department's Form 138 user manual requires deductors to use the latest Return Preparation Utility, generate a validated file and upload it through the e-filing portal using TAN credentials.

Accurate reporting carries extra weight 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 produce defective filings, delayed TDS credits or notices from the tax department.