Summary: From tax year 2026-27, employers must use Form 138 for quarterly salary TDS reporting and Form 130 for annual salary TDS certificates under the Income-tax Act, 2025 and Income-tax Rules, 2026. These replace Form 24Q and Form 16 respectively, while the earlier forms remain relevant to tax year 2025-26 and preceding years. Form 130 is generated through TRACES after processing the relevant Form 138 statements and supporting annexures. A certificate prepared independently through payroll software does not satisfy the prescribed generation requirement. Form 130 contains employer and employee details, tax deduction particulars and detailed income computations. It also accommodates specified senior citizens whose eligible pension and interest income is subject to tax deduction by specified banks. Employers must issue certificates for tax year 2026-27 by 15 June 2027. Where employees change jobs during the year, the respective employers issue certificates for their employment periods, while the employee has an option concerning issuance of Part C Annexure-I. Form 138 must be filed each quarter, with Annexure-I accompanying every quarterly statement and Annexures-II and III accompanying the fourth-quarter statement. The quarterly filing deadlines are 31 July, 31 October, 31 January and 31 May. Payroll teams should verify earlier filings, reconcile salary and tax figures, update internal procedures, document responsibilities for employees changing jobs and maintain correction records. The central operational requirement is ensuring that accurate Form 138 data is processed before Form 130 certificates are generated and issued.
- Form 130 and Form 138 From Tax Year 2026-27: What Payroll Teams Must Change
- Form 16 and Form 24Q Replacements
- Form 130: Contents, Generation and Issuance
- What Form 130 Contains
- Can Form 130 Come From Payroll Software?
- Who Issues Form 130 After a Mid-Year Job Change?
- Form 138: Quarterly Salary TDS Statement
- Form 138 and Who Files It
- Form 138 Due Dates
- Payroll Compliance Checklist Before 15 June 2027
- Work for Payroll Teams Before 15 June 2027
- Key Takeaways for Employers and Payroll Teams
- The Short Version
Form 130 and Form 138 From Tax Year 2026-27: What Payroll Teams Must Change
Form 16 and Form 24Q Replacements
From tax year 2026-27 (1 April 2026 to 31 March 2027), Form No. 130 replaces Form 16 as the annual certificate of tax deducted from salary, and Form No. 138 replaces Form 24Q as the quarterly TDS statement on salary. Both forms come from the Income-tax Rules, 2026, which the CBDT notified on 20 March 2026 under the Income-tax Act, 2025. Form 130 is issued under section 395(4) of the 2025 Act read with Rule 215. Form 138 is filed under section 397(3)(b) read with Rule 219. For tax year 2025-26 and earlier, Form 16 and Form 24Q still apply, because section 536(2) of the 2025 Act keeps the 1961 Act alive for those years.
By November 2026 most employers have filed two quarters of Form 138, so the renaming itself is done. The harder parts come later: the Q4 annexures due on 31 May 2027, and the first Form 130 certificates due on 15 June 2027. Three habits from the Form 16 years cause trouble here. Some teams still print certificates offline. Some file full-year annexures every quarter. And when an employee changes jobs mid-year, nobody decides in writing which employer issues Part C.
Form 130: Contents, Generation and Issuance
What Form 130 Contains
Form 130 certifies tax deducted from salary under section 392(1), other than section 392(7). It also covers specified senior citizens whose pension and interest are taxed by a specified bank under section 393(1) [Table: Sl. No. 8(iii)].
The form has three parts. Part A has the employer’s (or specified bank’s) details and the employee’s (or specified senior citizen’s) details. Part B reconciles amounts paid or credited against tax deducted. Part C has two annexures. Annexure-I applies to salary TDS under section 392 and holds the full computation: gross salary break-up, exemptions, deductions, total taxable income, tax payable, relief under section 157, TDS or TCS paid, and net tax payable. Annexure-II applies to specified senior citizens, for pension and interest paid by a specified bank.
The employer must issue Form 130 once tax has been deducted and deposited. The employee does not attach it to the return of income but should keep it. If the original is lost, the employer can issue a duplicate, and the duplicate must be marked as one.
Can Form 130 Come From Payroll Software?
No. According to the Department’s FAQ, the employer downloads Form 130 from TRACES and gives it to the employee after signing it digitally or by hand. A certificate typed offline or produced inside payroll software is not a valid Form 130, however closely it copies the layout.
TRACES generates Form 130 only after it processes the employer’s quarterly Form 138 statements and annexures. If Form 138 was not filed, there is nothing to download.
The due date is 15 June of the financial year after the tax year in which tax was deducted. For tax year 2026-27, that is 15 June 2027.
If a certificate is wrong, the employer files a revised Form 138. Once TRACES processes the revision, a corrected Form 130 can be downloaded and issued.
Who Issues Form 130 After a Mid-Year Job Change?
Each employer issues Part A and Part B for the period the employee worked there. Part C Annexure-I can come from each employer or from the last employer, at the employee’s option. Record that choice in writing before June. Without it, the employee can end up with two Part C computations that disagree, or with none at all.
Form 138: Quarterly Salary TDS Statement
Form 138 and Who Files It
Form 138 is the quarterly statement of tax deducted from salary under section 392, and from certain senior-citizen income by specified banks under section 393(1) [Table: Sl. No. 8(iii)]. Every employer that deducts tax from salary files it, as does every specified bank in the senior-citizen cases.
The annexure pattern catches teams out. Annexure-I goes with every quarter. Annexure-II and Annexure-III go with Q4 only. Pushing full-year annexures in Q1 to Q3 leads to rejections that could have been avoided. Leaving out Annexure-II and III in Q4 is worse, because TRACES then cannot generate a clean Form 130 from that statement.
Filing is electronic only. A submitted Form 138 cannot be edited in place. Corrections go through a correction statement after CPC-TDS has processed the original, and the window runs for two years from the end of the tax year in which the statement was due. The FAQ’s example: a correction to the Q3 statement for tax year 2026-27 can be filed until 31 March 2029.
Each successful filing produces an Acknowledgment Receipt Number (ARN). The Form 138 FAQ lists a fee under section 427 for late filing, and penalty proceedings under sections 461 and 465(2)(g) for late or incorrect statements.
Form 138 Due Dates
| Quarter | Period | Due date | Tax year 2026-27 |
|---|---|---|---|
| Q1 | April to June | 31 July of the tax year | 31 July 2026 |
| Q2 | July to September | 31 October of the tax year | 31 October 2026 |
| Q3 | October to December | 31 January of the tax year | 31 January 2027 |
| Q4 | January to March | 31 May after the tax year ends | 31 May 2027 |
Anyone who filed Form 24Q will recognise these dates. What changed is the form code, the Act and Rule citations, the annexure pattern, and the hard dependency between Form 138 processing and the Form 130 download.
Payroll Compliance Checklist Before 15 June 2027
Work for Payroll Teams Before 15 June 2027
- Audit the Q1 and Q2 statements already filed. Confirm each carried Annexure-I only and that TRACES processed it without defaults. Cleaning up a Q1 error now is far easier than doing it in May.
- Rename every checklist, SOP and vendor ticket that still says Form 16 or Form 24Q, but keep the old names as search aliases. Staff will keep typing “Form 16” for a year.
- Map Part A, Part B and Part C fields to the salary register, so that Annexure-I matches what employees already see on payslips and in their Form 12BB-style declarations (Form 124 under the 2026 Rules).
- For every joiner and leaver in tax year 2026-27, decide who issues Part C Annexure-I and put the employee’s choice on file.
- Stop any process that prints a home-grown annual certificate and calls it Form 130. Only the TRACES download counts.
- Build a Q4 annexure checklist now, so Annexure-II and Annexure-III go in with the 31 May 2027 statement and not as a correction in June.
- Keep a correction log: original ARN, error found, correction ARN, and the date the corrected Form 130 went out. When an employee’s AIS or ITR credit does not match, this log answers the question quickly.
Key Takeaways for Employers and Payroll Teams
The Short Version
Form 130 is valid only if it comes from TRACES, and TRACES produces it only from a processed Form 138. That chain is the real change, more than the new numbers. A team that gets the Q4 annexures right and settles Part C ownership for job-changers before June 2027 will issue certificates on time. A team still working the Form 16 way will find out in June, when an employee asks for a certificate that TRACES cannot generate.
