Income-tax Act 2025 for Payroll: Section 392, Form 130 and Form 138 Explained
From 1 April 2026 the Income-tax Act, 2025 applies. Salary TDS is Section 392, Form 16 is Form 130, Form 24Q is Form 138 and Form 12BB is Form 124. Tax rules, the 7th-of-month deposit date and the quarterly return dates did not change, so the work is renaming forms and updating software.
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. For payroll, the first thing you will notice is that familiar names have changed. Salary TDS now sits under Section 392, Form 16 is Form 130 and the quarterly salary return, Form 24Q, is Form 138. The tax rules themselves did not become new, so most of your process stays the same.
Old and new names
| Old | New | What it is |
|---|---|---|
| Section 192 | Section 392 | TDS on salary |
| Section 194J and 194C | Section 393 (table entries) | TDS on professional fees and contractors |
| Form 16 | Form 130 | Annual TDS certificate for salary |
| Form 16A | Form 131 | TDS certificate for other payments |
| Form 24Q | Form 138 | Quarterly TDS return for salary |
| Form 26Q | Form 140 | Quarterly TDS return, payments to residents |
| Form 27Q | Form 144 | Quarterly TDS return, non-residents |
| Form 12BB | Form 124 | Employee's investment and HRA declaration |
| Form 12BA | Form 123 | Statement of perquisites |
| Form 26AS | Form 168 | Annual tax statement |
| Form 15G and 15H | Form 121 | Declaration to avoid TDS |
| Section 80C | Section 123 | Deduction for specified investments |
The form numbers come from the Income-tax Rules, 2026, notified in March 2026 and effective from 1 April 2026. The old forms apply to anything up to 31 March 2026.
What did not change
- ✓Deposit date. TDS is deposited by the 7th of the following month. The exception is March, when the due date is 30 April.
- ✓Return dates. Quarterly returns are due on 31 July, 31 October, 31 January and 31 May.
- ✓Certificate date. Form 130 goes to employees by 15 June after the end of the year.
- ✓The regime choice. The new regime is the default, and employees can opt for the old regime.
- ✓Slabs for 2026-27. The Budget did not change them. Under the new regime, a standard deduction of ₹75,000 applies and a rebate means no tax on taxable income up to ₹12 lakh. The old regime keeps its ₹50,000 standard deduction.
What did change in how you work
- Assessment year is now tax year. The Act uses "tax year" for the financial year. Returns for 2025-26, filed in 2026, still follow the old Act and its numbers, and the new numbers apply from tax year 2026-27.
- Software and templates. Form names appear in payroll systems, declarations, letters and Form 16 templates. FVU codes were reassigned, so your TDS software must be on the new version before you file the Q1 return.
- Declaration forms. Employees now submit investment and HRA declarations on Form 124.
- Penalties. Late filing of a TDS return carries a fee of ₹200 a day. Not issuing the annual certificate on time attracts a penalty of ₹500 a day (raised from ₹100 in 2022 under the old section 272A(2)(g); the 2025 Act carries it in section 465), capped at the tax deductible.
Form 16 or Form 130: which year uses which
| Salary paid | Certificate | Issue by | Quarterly return |
|---|---|---|---|
| Up to 31 March 2026 (FY 2025-26) | Form 16, under the 1961 Act | 15 June 2026 | Form 24Q |
| From 1 April 2026 (tax year 2026-27) | Form 130, under section 395(4)(b) and rule 215(1) | 15 June 2027 | Form 138 |
Form 130 has three parts. Part A carries the employer's and employee's details and the period of employment. Part B is the quarter-wise summary of salary paid, tax deducted and tax deposited. Part C is the detailed salary and tax computation. Like Form 16, it is produced from the quarterly return you file, so a wrong PAN or challan in Form 138 shows up in the certificate. To check an employee's deduction before the year ends, use the TDS calculator; for someone who joined mid-year, see counting the previous employer's salary.
Why the old names still matter
People will keep searching, asking and writing about Form 16 and Section 192 for a long time, and prior-year documents still use them. Use both in your internal documents for now, for example "Form 130 (earlier Form 16)".
Checklist for payroll teams
- ✓Update your payroll and TDS software to the 2026 version, and confirm it generates Form 138 and Form 130.
- ✓Replace Form 12BB with Form 124 in your declaration process.
- ✓Rename the perquisite statement to Form 123.
- ✓Update HR letters, FAQs and templates that mention the old names.
- ✓Keep the old forms for 2025-26 and earlier.
- ✓Brief employees: nothing about their tax changed because of the new numbers.
Some sources differ on how a few other sections were renumbered, so check the Act itself before you cite a number that is not in the table above.
Sources
- ✓Form 130 FAQs, Income Tax Department
- ✓Income-tax Act, 2025, Income Tax Department
- ✓Relakhs: new income tax forms 2026, full list
- ✓TaxGarden: old versus new income tax sections, mapping
- ✓TaxUpdate: new TDS return forms from FY 2026-27
Confirm with your tax advisor before you rely on a section number in a legal document.
Written by
HR Manager, Airwix Technologies (Sleet)
Nihit Dobariya is the HR Manager at Airwix Technologies in Ahmedabad, where he runs HR and payroll for the team behind Sleet. He writes about payroll, PF and ESIC, professional tax, the labour codes and everyday HR practice for Indian employers, and checks each rule against the official notification before it is published.
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