What changed on 1 April 2026
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, with the Income-tax Rules, 2026. For payroll the substance is the same — the employer still works out each employee’s tax for the year and deducts it evenly from salary — but the section, the forms and the vocabulary changed.
| Before (Income-tax Act, 1961) | From 1 April 2026 (Income-tax Act, 2025) |
|---|---|
| Section 192 — TDS on salary | Section 392 |
| Form 12BB — employee’s declaration of deductions | Form 124 (s.392(5)(b), rule 205) |
| Form 24Q — quarterly salary TDS return | Form 138 |
| Form 16 — annual salary TDS certificate | Form 130 (rule 215) |
| Previous year / assessment year | Tax year (the year the income is earned) |
Rates for tax year 2026-27
The new regime is the default. An employee who wants the old regime tells the employer at the start of the year; otherwise the employer deducts under the new one.
- Standard deduction: ₹75,000 under the new regime (₹50,000 under the old).
- Rebate: under the new regime, a resident individual with total income up to ₹12,00,000 pays no tax (rebate up to ₹60,000). With the standard deduction, that is salary of ₹12,75,000.
- Old regime: basic exemption ₹2,50,000 below age 60, with the deductions and exemptions (HRA, 80C-type savings, housing loan interest) the new regime does not allow.
| Income (new regime) | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
How the monthly deduction is worked out
- Estimate the year’s taxable salary: salary for the months paid plus the months still to come, less exemptions and deductions the employee has declared (old regime) and the standard deduction.
- Work out the tax for the year, less the rebate if any, plus cess.
- Deduct tax already deducted this year, and spread the rest over the remaining months.
- Re-estimate whenever pay changes — a raise, arrears, a bonus — and when proofs replace declarations near the year end.
Declarations and proofs
Employees declare their planned deductions and exemptions in Form 124 at the start of the year, and submit proofs before the final quarter so the employer can correct the deduction before 31 March. See investment declarations.
What HR and payroll do
- Collect PAN from every employee: without one, tax is deducted at the higher rate the Act sets.
- Deposit TDS by the 7th of the next month (30 April for March deductions).
- File Form 138 each quarter: by 31 July, 31 October, 31 January and 31 May.
- Issue Form 130 (downloaded from TRACES, with the employer’s salary details) by 15 June after the tax year.
WebHR works out each month’s TDS under the regime the employee chose — slabs, standard deduction, rebate, surcharge and cess — from their declarations, and shows the regime on the payslip. It prepares Part B of the annual certificate and the per-quarter figures and annexure for the quarterly return, lists employees with a missing PAN, and puts the deposit and return dates on the compliance calendar. The screens are Statutory → Form 130 (Form 16) and Form 138 (Form 24Q); the filing calendar and the employee’s certificate use the new names from tax year 2026-27 and the old ones for earlier years. WebHR does not generate the return file itself — prepare it from WebHR’s figures with the utility the Income Tax Department prescribes.
Forms and returns
| Form | What it is for | Who files | Download |
|---|---|---|---|
| Form 124 (was Form 12BB) | Employee’s declaration of deductions, exemptions and allowances | Employee | Official page |
| Form 138 (was Form 24Q) | Quarterly statement of TDS on salary | Employer | Official page |
| Form 130 (was Form 16) | Annual certificate of TDS on salary, to each employee | Employer | Official page |
Downloads open the issuing authority’s own page, so you always get the current version. All forms
Due dates
| What | When | How often |
|---|---|---|
| TDS on salary deposit | 7th of the following month; 30 April for March | Monthly |
| Form 138 quarterly return | 31 July, 31 October, 31 January, 31 May | Quarterly |
| Form 130 to employees | By 15 June after the tax year | Annual |
| Form 124 declarations | Start of the tax year; proofs before the last quarter (employer sets the date) | Annual |
If a due date falls on a holiday, the authority’s own rule for the next working day applies. Full compliance calendar
References
- Income Tax Department — Form Nos. 130–133 (earlier Form 16/16A…)
- Income Tax Department — Form 130 FAQs
- Income Tax Department — TDS compliance
- ClearTax — section 392 of the Income-tax Act, 2025
- ClearTax — income tax slabs FY 2026-27
- Keka — investment declaration: Form 12BB to Form 124
- SCC Online — Form 130 in place of Form 16
Related
Plain-language guidance for HR teams, not legal advice. Checked against the sources above on 29 September 2026; the notification or your authority’s portal is final. Spotted something out of date? Tell us.