As a Chartered Accountant who has navigated the complexities of the transition from the 1961 Act to the Income-tax Act, 2025, I find it fascinating and frankly, concerning how the Department’s automated systems are lagging behind its own legislative reforms.
THE COMPLIANCE PARADOX: NEW LAW, OLD NOTIFICATIONS
The notification received regarding Form-13 approvals for the upcoming year is a classic example of systemic lag. While the Income-tax Rules, 2026 have completely overhauled the administrative framework, the communication engine remains tethered to the erstwhile era.
1. THE NOMENCLATURE DISCONNECT: FORM 13 VS. FORM 128
Under the Income-tax Act, 2025, the Department introduced a logical renumbering of forms to streamline compliance.
a) The Reality: Legacy Form 13 (Application for Lower/Nil Deduction of TDS) has been officially superseded by Form 128 for the 2026-27 cycle.
b) The Error: The automated email still directs taxpayers to download a Form-13 certificate. This creates a fundamental disconnect between the intimation received and the statutory forms prescribed under the new regime.
2. THE OBSOLESCENCE OF FINANCIAL YEAR
One of the cornerstone changes of the 2025 Act is the unification of the Financial Year (FY) and Assessment Year (AY) into a singular Tax Year concept.
i) The Vision: To eliminate the confusion where income earned in Year X is assessed in Year Y.
ii) The System Lag: The CPC’s email still clings to the Financial Year 2026-27 terminology. While legally understandable during this transition, it fails to reinforce the new Tax Year branding that the CBDT has been promoting in its circulars.
3. BROKEN NAVIGATION PATHS
The intimation provides a download path: TRACES Home >> Downloads >> Download 197, 206C(9) Certificate.
a) However, under the Income-tax Rules, 2026, Section 197 has been replaced by the corresponding sections in the new Act (the 300-series for TDS provisions).
b) If the portal UI updates to reflect the new Section numbers but the emails continue to reference 197, the Department is essentially providing a map to a statutory framework that no longer exists.
THE PROFESSIONAL VERDICT
For a Department that has successfully implemented Face-less Assessment and T+1 processing, this lack of Content Synchronization is a missed opportunity.
When the law changes, the metadata must change with it. As professionals, we are not just managing taxes; we are managing systems. If the government expects us to transition to the Income-tax Act, 2025 seamlessly, their automated triggers must speak the language of the new Act, not the ghosts of the 1961 version.
MY ADVICE TO PEERS:
When you receive these intimations for your clients, do not look for Form 13. Ensure your team is trained to identify the new Form 128 equivalents and map them to the corresponding certificates in the revamped TRACES module.
The law has evolved. It’s time the Alert Notification Message did the same.
The confusion here is systematic, not just one client file.
TRACES is still running on Income Tax Act, 1961 section codes. The Income Tax Act, 2025 consolidated them from April 1, 2026: Section 392 covers salary TDS (replaces Section 192). Section 393 consolidates all other TDS payments , 194A, 194C, 194J, 194Q, 194N and others merged into one section.
Three practical consequences right now:
1. INTIMATIONS: TDS intimations and demand notices issued through TRACES may still cite old section codes (e.g. 194C, 194J) even for TY 2026-27 transactions. Treat these as their Section 393 equivalent , the substantive liability is identical.
2. FORM 197 vs FORM 128: Lower deduction certificates issued before April 1, 2026 under Section 197 (old Act) remain valid for the tax year they were issued for. New applications from April 2026 must use the revised Form 128 under Section 396 of the 2025 Act. If TRACES still shows Form 197 in its interface, verify whether the certificate predates April 2026.
3. TDS RETURNS: Returns for TY 2026-27 (forms 24Q/26Q) require new section codes. Returns for TY 2025-26 and earlier must use old codes. Mixing periods is the most common source of TRACES mismatches right now.
Until TRACES 2.0 fully migrates, maintain a local mapping table for your practice: old section -> 2025 Act section. Do not raise rectification requests for old-code intimations that have the correct tax amount , the system will self-correct as TRACES migrates.