ITR 2026: Filing TDS/TCS return for Q1? New forms, section codes and July 31 deadline explained

Businesses and tax deductors preparing to file their first-quarter TDS and TCS returns for Tax Year (TY) 2026-27 will need to adapt to a new compliance framework under the Income-tax Act, 2025. The first quarterly filing under the new law introduces revised return forms, new section codes and updated reporting requirements, making accurate reconciliation more important than ever.

Tax professionals say deductors should familiarise themselves with the changes well before the July 31, 2026 due date to avoid filing errors and last-minute compliance issues.

New return forms replace old formats

One of the biggest changes this year is the introduction of new quarterly return forms.

Under the revised framework:

Form 138 replaces Form 24Q for TDS deducted from salary payments.
Form 140 replaces Form 26Q for TDS on non-salary payments.
Form 143 replaces Form 27EQ for Tax Collected at Source (TCS).

All three forms must be filed for the first quarter of TY 2026-27 by July 31, 2026.

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The new forms are part of the migration to the Income-tax Act, 2025, which has reorganised provisions and introduced fresh section numbering while retaining the overall compliance structure.

New section codes for TDS and TCS

Along with new forms, deductors will also have to report transactions using the new section codes prescribed under the Income-tax Act, 2025.

For example, the earlier Section 192 governing TDS on salary payments is now reported under Section 1602. Similarly, TDS provisions relating to commission, rent, contractor payments, professional fees, purchase of goods and partnership remuneration have all been assigned new section numbers.

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TCS provisions have also been renumbered. For instance, TCS on the sale of scrap, earlier covered under Section 206C(1), is now reported under Section 1073.

Tax experts advise businesses to ensure that their payroll systems, accounting software and TDS utilities have been updated with the revised section codes before preparing quarterly statements.

Q1 TDS/TCS Return Filing (TY 2026-27): Key changes at a glance

Particulars	Old Framework	New Framework (Income-tax Act, 2025)
Salary TDS return	Form 24Q	Form 138
Non-salary TDS return	Form 26Q	Form 140
TCS return	Form 27EQ	Form 143
Due date for Q1 return	31 July	31 July 2026
Applicable law	Income-tax Act, 1961	Income-tax Act, 2025
Section references	Old section numbers	New section codes

Key TDS/TCS section code changes

Nature of Payment	Old Section	New Section	TDS/TCS Rate
Salary	192	1602	Slab rates
Commission/Brokerage	194H	1606	2%
Rent (Land/Building)	194I(a)	1609	10%
Rent (Plant & Machinery)	194I(b)	1610	2%
Professional/Technical Fees	194J	1627	10%
Contractor Payments	194C	1623	1%/2%
Purchase of Goods	194Q	1631	0.1%
Partner's Salary/Commission	194T	1667	10%
TCS on Sale of Scrap	206C(1)	1073	2%

Compliance checklist before filing

Checklist	Action Required
Verify return form	Use Form 138, 140 or 143, as applicable
Check section codes	Use new section numbers under the Income-tax Act, 2025
Reconcile challans	Match tax deposited with deductions collected
Split common challans	Allocate amounts correctly if one challan covers multiple section codes
Meet due date	File Q1 TDS/TCS returns by July 31, 2026

Watch out for common challans

Chartered Accountant Harshil Sheth has highlighted another practical challenge that deductors may face while filing Q1 returns.

If tax has been deposited for multiple section codes using a single challan, additional reconciliation may be required before filing the returns.

According to Sheth, the challan amount must be correctly allocated among Form 138, Form 140 and Form 143, as the return filing utility needs to identify which portion of the tax payment relates to each return.

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He advises taxpayers to carefully review challan details while downloading payment records, as proper classification at this stage can save considerable reconciliation time later.

Why accurate filing matters

Although the return formats have changed, the compliance responsibility remains the same. Incorrect section codes, mismatch between challans and returns, or errors in allocating tax payments can lead to defective filings, notices or delays in processing TDS credits.

Tax professionals recommend reconciling deduction records with challans before preparing quarterly returns and verifying that each deduction has been mapped to the correct form and section code.

With the first quarterly filing under the new Income-tax Act now underway, businesses that prepare early and update their systems are likely to find the transition smoother. Completing reconciliations in advance and ensuring the correct use of the revised forms and section codes can help avoid unnecessary compliance issues before the July 31, 2026 deadline.