Paying TDS on time has always been part of running a compliant business, but the process changed significantly from 1st April 2026. With the Income Tax Act, 2025, now in force, the income tax portal introduced a new challan system, complete with a fresh Act selection screen, new challan forms, and revised steps. If you’re still following the old routine, you might get stuck or generate a challan under the wrong act. This guide explains how to properly create a TDS challan under the new system.

Before You Start

Make sure you have the following ready before logging in:

• Your TAN and portal login credentials
• The deductee’s PAN details
• The exact TDS amount, along with any interest or late fee, if applicable
• A stable internet connection and an updated browser

Logging in with your TAN is recommended over the login-free “Quick Links” route, since it keeps a proper record of your payment history on the portal.

Steps to Generate the Challan

Once you’re ready, follow these steps on the income tax e-filing portal:

1. Log in using your TAN and password, then go to the Dashboard.
2. Click on e-File, then select e-Pay Tax. This takes you to the Act Selection screen.
3. Choose the applicable act. Select the Income Tax Act, 2025, for any transaction where TDS was deducted or credited on or after 1st April 2026. If the deduction relates to March 2026 or earlier, select Income Tax Act, 1961, instead, and use the older challan form.
4. Click Continue, then select New Payment on the e-Pay Tax page to start a fresh challan.
5. Pick the correct tax year. For transactions from April 2026 onwards, this will be Tax Year 2026-27.
6. Click Proceed on the Pay TDS/TCS tile. You’ll then reach the Select Deductee Type screen, where you choose the relevant major head and the deductee’s residential status.
7. Select the applicable section (392, 393, or 394) and the specific payment code that matches your transaction, along with the TDS rate.
8. Enter the deductee’s PAN, the payment amount, the TDS amount, and any interest or late fee that applies.
9. Choose your payment method, such as net banking, RTGS or NEFT, a debit card, or UPI, and complete the transaction.

After Payment

Once the payment goes through, a Challan Reference Number gets generated, and you can download the receipt right away. This receipt carries the BSR code and challan serial number, both of which you’ll need later when filing your quarterly TDS return. It’s a good habit to check your Payment History tab periodically to confirm the challan reflects correctly, and to verify the deductee’s PAN status beforehand, since an inoperative PAN attracts a higher TDS rate.

Keep in mind that mixing old-Act and new-Act transactions on a single challan won’t work. If you have payments falling under both periods, generate separate challans for each.

Conclusion

Generating a TDS challan under the new system isn’t complicated once you know where the Act selection screen sits and which payment code applies to your transaction. Taking a few extra minutes to pick the right Act, Tax Year, and section keeps your challan valid and your quarterly return free of errors. As more businesses get used to this routine, it will start to feel just as familiar as the old process once did.