New TDS Return Forms 138 & 140: Goodbye 24Q and 26Q

Imagine it is the last week of the quarter. Arjun, a seasoned payroll manager at a mid-sized tech firm in Bengaluru, has his “TDS Filing” playlist ready and a large cup of coffee on his desk. He opens the e-filing portal, ready to upload the usual Form 24Q for his 500+ employees. But he stops. The option for 24Q is greyed out, and a new notification flashes: “Please use New TDS Return Forms 138 and 140 for this period.”

Arjun isn’t alone. Across India, CAs, tax pros, and business owners are waking up to a major shift in the tax compliance landscape. Agar aap abhi bhi Form 24Q aur 26Q ke purane raste par chal rahe hain… toh thoda sambhal jaiye. The Income Tax Department has officially retired the decades-old filing system.

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In a massive move toward “Ease of Doing Business,” the CBDT has replaced the traditional Form 24Q (for salary) and Form 26Q (for non-salary payments) with two consolidated and highly digitised forms: Form 138 and Form 140. This change, effective from the date notified by the official amendment notice CBDT Notification No. 22/2026 / G.S.R. 198(E) 20th March 2026, aims to reduce the compliance headache that has long plagued deductors.

Official Notification Check here

Whether you are a deductor or a salaried professional waiting for your Form 16, this change affects you directly. Let’s dive into what this means for your next filing season.

What Were Form 24Q and Form 26Q? (A Quick Recap)

Before we talk about the new kids on the block, let’s remember why the old ones existed. For years, the TDS (Tax Deducted at Source) framework relied heavily on separate silos. If you paid a salary, you filed one form. If you paid rent or professional fees, you filed another.

Form 24Q was the staple for employers. It was used to report TDS on salary payments under Section 192 of the Income Tax Act, 1961. It required detailed Annexures—Annexure I for the first three quarters and the more detailed Annexure II for the final quarter, which included the full tax computation for each employee.

Form 26Q, on the other hand, was the “catch-all” form for domestic payments other than salary. This included everything from interest on securities to professional fees and even winnings from lotteries.

As per Section 200(3) of the Income Tax Act, 1961, every person deducting tax was required to file these statements within the prescribed time. While the system worked, it often led to data duplication and “mismatches” in the Form 26AS of the deductees.

Why Did the Government Replace Them?

The shift to the New TDS Return Forms 138 and 140 isn’t just a cosmetic change. It is a strategic move by the Ministry of Finance to integrate the TDS process with the wider Project Insight and the revamped e-filing 2.0 portal.

The primary goal? Simplification and pre-filled accuracy. The old forms were often criticized for being “clunky”—requiring manual entry of challan details that the department already had in its database. By consolidating these into Forms 138 and 140, the CBDT is moving toward a system where the “Challan-Return” mismatch becomes a thing of the past.

As per the official amendment notified by CBDT [VERIFY: add exact citation here], the integration allows for real-time validation of PAN and TAN, ensuring that the tax deducted actually reaches the right government account without a “broken link” in the middle.

“The new forms aim to streamline TDS compliance and reduce duplication of data entry, ensuring faster processing of returns and quicker reflection of credits in the taxpayer’s Form 26AS/AIS.”

Source: CBDT Samvaad Series on Income Tax Rules, 2026

By merging various sub-categories and introducing smarter validation rules, the government hopes to reduce the number of “TDS Correction” filings, which currently make up a huge chunk of a CA’s workload.

Introducing New Form 138 and Form 140

So, what exactly are these new forms? Let’s break them down.

What is Form 138?

Form 138 is the direct successor to Form 24Q. If you are an employer—whether you run a 5-person startup or a 5,000-employee conglomerate—this is your new best friend for reporting salary TDS. It retains the core requirement of reporting salary break-ups but introduces a more granular way of reporting “Perquisites” and “Exemptions” under the New Tax Regime, as per the official amendment notified by CBDT.

What is Form 140?

Form 140 is the replacement for Form 26Q. It covers all domestic non-salary TDS payments. The big change here is the consolidation. Form 140 is designed to be more “dynamic.” Depending on the nature of the payment (rent vs. professional fee), the form fields adjust themselves, reducing the clutter of irrelevant columns.

Detailed Comparison: Old vs. New

As per the official amendment notified by  CBDT Notification No. 22/2026 / G.S.R. 198(E) 20th March 2026, these new forms also require mandatory reporting of the “Unique Transaction Number (UTN)” in cases where tax is deposited without a traditional challan (government departments).

Step-by-Step: How to File Form 138 and Form 140

Transitioning to a new system can be scary, but the process for the New TDS Return Forms 138 and 140 is quite logical. Here is how you do it:

1. Data Preparation: Consolidate your TDS data for the quarter. Ensure all PANs are valid. As per Section 206AA of the Income Tax Act, 1961, if a deductee does not provide a PAN, you must deduct tax at a higher rate (usually 20%).
2. Download the Utility: Go to the official Income Tax Portal or the Protean (formerly TIN-NSDL) website. Look for the latest File Validation Utility (FVU) specifically designed for Form 138 and 140.
3. Fill the Data: Use the offline utility to fill in the deductee details, payment dates, and amount deducted. A new feature in Form 138 allows you to import “Previous Quarter Data” to save time on recurring employee details.
4. Challan Mapping: Unlike the old days of manual entry, you can now “Fetch Challan” directly if you are filing online. This maps the BSR code, Date of Deposit, and Challan Serial Number automatically.
5. Generate FVU File: Once the data is validated and shows “No Errors,” generate the .fvu file.
6. Upload to Portal: Log in to your TAN account on the e-filing portal. Navigate to ‘TDS’ -> ‘Upload TDS Return’. Select the Form (138 or 140), the Financial Year, and the Quarter.
7. Verification: Verify the upload using a Digital Signature Certificate (DSC) or an Electronic Verification Code (EVC) via Aadhaar OTP.

Deadlines & Penalties: Don’t Miss This!

Dosto, tax bharna aur return file karna do alag baatein hain. Even if you have paid the TDS challan on time, failing to file Form 138 or 140 by the due date will cost you.

The deadlines for these new forms remain quarterly, as per Rule 31A of the Income Tax Rules, 1962.

The “Ouch” Factors: Penalties

Bhool gaye toh ₹200/day ka penalty lagega — seriously!

• Late Filing Fee (Section 234E): If you miss the deadline, you are liable to pay Rs. 200 for every day the failure continues. However, the total fee cannot exceed the total amount of TDS deducted for that quarter.
• Penalty for Incorrect Filing (Section 271H): If you provide incorrect information or fail to file the return within one year from the due date, the Assessing Officer can levy a penalty ranging from Rs. 10,000 to Rs. 1,00,000.

Who Is Most Affected? (Real-World Impact)

This isn’t just a “CA problem.” The ripple effect of moving to New TDS Return Forms 138 and 140 hits various stakeholders differently:

• Employers: Small business owners who used to DIY their 24Q now need to learn the nuances of Form 138, especially regarding the declaration of employee regimes.
• SMEs and Startups: With stricter validation in Form 140, startups must be careful with “Contractor vs. Professional” classifications to avoid notices.
• CA Firms: It’s a busy season for tax pros! They need to update their internal software (like Winman, ClearTax, or Tally) to support the new schemas.
• Individual Taxpayers: For you, this is good news. Faster processing of Form 138/140 means your Annual Information Statement (AIS) and Form 26AS will be updated much sooner, making your ITR filing smoother.
• Government Deductors: The integration of the Treasury “Book Entry” system into Form 140 simplifies things for DDOs (Drawing and Disbursing Officers).

Common Mistakes to Avoid

Even the pros can slip up when a new form is introduced. Here are the “red flags” to watch out for:

• Still using the old FVU: You cannot validate Form 138 data using an old 24Q utility. Always download the latest version from the portal.
• Incorrect PAN Mapping: Form 140 has a stricter validation gate. If the PAN-Name combination doesn’t match the database, the return might get rejected at the upload stage.
• Ignoring Mandatory New Fields: Form 138 requires specific flags for “Opted for New Regime” which were optional or handled differently in 24Q.
• Delayed Challan Payment: If the challan isn’t reflected in the OLTAS (Online Tax Accounting System), the “Fetch Challan” feature in the new forms won’t work.

Expert Pro Insight

Pro Tip from a CA: “Don’t wait for the 31st. The new Form 138 and 140 infrastructure is still evolving. During the first few cycles of any new form, the e-filing portal often experiences heavy traffic and occasional glitches. File your returns at least 10 days in advance. Also, ensure your ‘Contact Person’ details in the TAN profile are updated, as all communications regarding the new forms will go there directly.”

Bottom Line

The transition from 24Q and 26Q to New TDS Return Forms 138 and 140 is a giant leap toward a paperless, frictionless tax environment. Yes, there’s a learning curve—any change in India’s tax system usually comes with a bit of “initial tension”—but the long-term benefits of fewer mismatches and faster refunds are worth it.

Stay updated, keep your records clean, and make sure your tax software is ready for the new era.

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