Changes In TDS, TCS Rules: Forms 138 And 140 Replace Old Forms 24Q And 26Q — Here's What You Need To Know

Effective April 1, 2026, the beginning of the new financial year 2026-27, the government has made certain updates to the income tax framework, with the rollout of the new Income-tax Act, 2025. The changes made in the law are aimed at simplifying income tax return filing processes, expanding digital reporting, and improving transparency.

As part of this transition, tax deducted at source (TDS) and tax collected at source (TCS) systems have been overhauled to save time, reduce manual errors, and fasten the processing time. The government has replaced the old Forms 24Q and 26Q with Forms 138 and 140 as part of the changes. These forms will continue to be used for reporting TDS statements quarterly.

According to the income tax department, the new forms are “simple, tech-enabled and reliable,” and will help taxpayers file their TDS returns easily and in a timely manner. The new forms also offer features, such as auto-prefill of details, real-time validations, drop-down menus, date-pickers, and checkbox verification, which will guide users and reduce errors while filing, the tax department said.

Who Should File Form 138

Form 138 is particularly used by employers to report TDS deducted from salaries paid to their employees under Section 392 of the Income-tax Act, 2025. This form will also be used by specified banks to report TDS on income paid to certain senior citizens.

There are two kinds of entities who are required to file Form 138. First, an employer, whether a company, firm, government body, or individual deducting tax at source (TDS) from their employees’ salary. Any specified bank which deducts tax at source on pension and interest income to senior citizens must also file this form.

Who Should File Form 140

Entities responsible for deducting tax on non-salary payments made to residents, such as commission, broking, professional fees, or rent, are required to complete Form 140 on a quarterly basis. Any entity that is in charge of providing non-salary payments to a resident that are tax deductible, regardless of whether it is a business, firm, partnership, government, or individual will also need to file Form 140.

Changes In TCS Rules

TCS rules have also been updated by the government, with reduction in rates in a bid to ease the upfront tax burden on individuals. 

Foreign travel packages will now be taxed at a flat rate of 2 per cent. Remittances for medical care and education overseas TCS has also been lowered to 2 per cent from 5 per cent on relevant sums. Travellers and households with international financial obligations should benefit greatly from these adjustments.