TDS Challans under the Income Tax Act 2025 contain errors
The revised TDS challan system under the Income Tax Act 2025 for FY 2026–27 has introduced a significant structural change by permitting taxpayers to deposit tax deducted at source under multiple sections through a single challan. For instance, TDS deducted on interest other than interest on securities, fees for technical services, and fees for professional services can now be remitted together in one payment, simplifying the payment process.
The new format, however, continues to retain key classifications at the entry stage. Separate challans remain applicable based on whether the deductee is a company or non-company, and whether the payment is made to a resident or non-resident. In addition, TDS on interest payable to senior citizens has been separately identified from other interest payments, indicating a more granular classification framework.
While the intent appears to be simplification, practical issues have already surfaced. A notable design error is that options relating to interest paid to senior citizens and non-senior citizens are appearing under the Company Deductee challan, where such categories may not be relevant in many cases. This creates a real risk of taxpayers depositing TDS under an incorrect head.
Once payment is made under the wrong classification, rectification is far from simple. Taxpayers may have to seek a minor head correction, a process that is often cumbersome, manual, and time-consuming, with no seamless automated mechanism for quick correction.
The larger concern is systemic: software design flaws are effectively shifting the burden of testing onto taxpayers and tax professionals. Instead of easing compliance, such errors create avoidable disputes, administrative delays, and additional professional costs. A tax payment utility should reduce friction—not create new compliance hurdles through preventable design mistakes.
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