TDS return on salaries: Form 138 under the 2025 Act (formerly Form 24Q)

What changed in April 2026?

Under the Income-tax Rules 2026, the salary TDS return Form 24Q was renumbered as Form 138, and TDS on salary moved from section 192 to section 392 of the new Act. The core obligation is unchanged: estimate each employee's annual tax, deduct it monthly, deposit it, and report it quarterly.

The switch depends on when tax was deducted. Statements for quarters up to January-March 2026 belong to FY 2025-26 and were filed in Form 24Q, with Q4 due by 31 May 2026. Tax deducted from 1 April 2026 is reported in Form 138, so the first Form 138 was the April-June 2026 return.

Employees also see these changes. Investment declarations moved from Form 12BB to Form 124, and the statement of perquisites from Form 12BA to Form 123. Payroll software and HR templates should use the new numbers for tax year 2026-27 onwards.

Due dates and deposit timelines

Tax deducted in a month must be deposited by the 7th of the next month, except tax deducted in March, which is due by 30 April. Government deductors without a challan deposit on the same day. Deposits for tax year 2026-27 use the new ITNS 281N challan.

Late fee, interest and penalty

A statement filed late attracts a fee of ₹200 a day until it is filed, capped at the tax deducted in that statement. Commentaries place this in section 427 of the new Act, succeeding section 234E. The fee must be paid before the late statement is accepted.

Interest applies to the tax, separately from the fee: 1% a month or part from the date tax was deductible to the date it was deducted, and 1.5% a month from deduction to deposit. A penalty of ₹10,000 to ₹1 lakh can apply for not filing or for incorrect particulars, though filing within a year with tax, fee and interest paid has historically kept deductors out of penalty.

What data do you need?

Salary TDS is computed for each employee separately, so the return draws on payroll records rather than the accounts alone. Keep the following ready for every quarter, and update it whenever an employee joins or leaves.

• TAN, deductor details and responsible person's PAN
• Employee PAN, salary paid and TDS deducted each month
• Challan details: BSR code, date and challan serial number
• Tax regime chosen by each employee; the new regime is the default
• For Q4: annual salary breakup, exemptions, deductions and previous employer income
• Investment declarations, now in Form 124 (formerly Form 12BB)

Common errors and consequences

The most common errors are wrong or missing employee PANs, challan details that do not match, wrong regime treatment, and ignoring income from a previous employer. A missing PAN forces a higher deduction rate and generates a default notice on TRACES. Employees will also see wrong credits in their annual statement and may complain.

Corrections are filed as correction statements using the same token number. After processing, TDS certificates in Form 130 are downloaded from TRACES. Refogo's partner professionals can prepare and file salary TDS returns for a fixed fee.

Step by step

1. 1Reconcile payroll and challans

   Match monthly salary TDS with challans deposited through ITNS 281N.

2. 2Prepare the statement

   Use the Return Preparation Utility to create Form 138 with employee and challan data.

3. 3Validate through FVU

   Run the File Validation Utility to generate the upload file.

4. 4Upload with TAN login

   Select the 2025 Act, tax year, quarter and form, and upload the file.

5. 5Verify and track

   E-verify the upload and check acceptance and defaults on TRACES.