TDS Under the New Income Tax Act, 2025: Checklist for Preparation

The new Income Tax Act, 2025, is set to be introduced from April 1, 2026, which will replace the old Income Tax Act, 1961, and bring several changes. One of the major changes will be the amendment in the TDS (Tax Deducted at Source) system. The updated TDS forms will be launched to ease the compliance, reduce discrepancies and improve transparency.

The new forms and rules will be officially announced by the Income Tax Department around the implementation date of April 1, 2026. With these new TDS forms, it is important for businesses and individuals to start preparing. Here is a checklist, which you must prepare for:

Checklist for Businesses and Deductors

• Staff Training: Ensure that your accounts and compliance teams are well-trained for the new Act, the revised TDS forms, and updated filing procedures. This will help avoid errors and delays.
• Revised TDS Rates and Thresholds: Make sure you are ready to apply new TDS rates and threshold limits for different types of payments under the new Act.
• Consolidated TDS Provisions: The new Act might group the TDS sections together in one table. It is important that you know about the restructuring provisions to apply the rules correctly.
• Update Your Systems: your accounting software and payroll systems can handle the new TDS forms, updated reporting formats, and any changes in tax calculation. Work with your IT team to update these things.
• Review Internal Process: review and potentially adjust your internal documentation and compliance calendars to align with the new quarterly filing and reconciliation requirements.
• New Disclosure Requirements: The new TDS forms may need additional disclosures to improve transparency and integration with tax records. Stay updated and look for such changes.
• Data Accuracy: Make sure that the TDS details you report match the details in the Annual Information Statement (AIS) and Form 26AS to minimise errors and avoid notices or penalties.
• TAN Compliance: Your Tax Deduction Account Number (TAN) must be active and correctly used in all relevant documents.
• Consult Professionals: If you are confused about the implications of the new act, consult a tax professional or legal advisor so that you do not get into legal trouble later.

Checklist for Individuals and Deductees

• Keep Your Records Ready: Start gathering documents like salary slips, Form 16, and proof of deductions or exemptions. If the documents are well organised, it will reduce delays and the chances of getting penalised.
• Understand the Concept of “Tax Year”: The new Act will introduce the concept of a “tax year”, which will avoid the confusion between the “previous year” and “assessment year”.
• Cross-Check Information: Before filing your tax returns, cross-check your income and TDS details with the information available in your Form 26AS and AIS.
• Check Eligibility: The new tax rules may change which exemptions and deductions are available to you right now. So regularly review these to minimise your tax liability.