Impact of GST on Real Estate Compliance

Real estate is one of India’s largest economic sectors, involving significant transactions between developers, contractors, businesses and homebuyers. Goods and Services Tax (GST) plays an important role in the taxation of construction-related supplies and services.

The GST framework for real estate has evolved over time. The GST rate rationalisation introduced in 2025, often referred to as GST 2.0, changed the rates applicable to several construction inputs and certain services. However, the special GST rates applicable to under-construction residential apartments remain relevant.

For developers and buyers, understanding the applicable rate, Input Tax Credit (ITC) rules, reverse charge provisions and e-invoicing requirements is essential for proper compliance.

GST’s Impact on Real Estate

GST generally applies to the construction of a property when the supply takes place before completion or first occupation, subject to the applicable provisions. A sale of a completed property, where the entire consideration is received after the completion certificate is issued or after first occupation, whichever is earlier, is generally outside the scope of GST.

For residential apartments, the applicable GST rate depends on whether the property qualifies as affordable housing.

Under the prevailing framework:

• Affordable residential apartments: 1% GST without ITC, subject to the applicable conditions.
• Other qualifying under-construction residential apartments: 5% GST without ITC.
• Ready-to-move-in properties: Generally no GST where the transaction falls within the applicable exemption after completion certificate or first occupation.
• Commercial property: The applicable rate depends on the nature of the supply and the applicable GST notification. Commercial construction and works-contract supplies should not be treated as automatically falling under the residential 1% or 5% scheme.

The 1% and 5% residential rates were introduced with effect from 1 April 2019 and are subject to specific conditions.

What Qualifies as Affordable Housing?

The concessional 1% GST rate is available only when the property satisfies the applicable definition of an affordable residential apartment.

Broadly, the GST framework uses both carpet-area and value criteria. The carpet-area limit is up to 60 square metres in metropolitan cities and up to 90 square metres in non-metropolitan cities, while the value limit is ₹45 lakh, subject to the applicable rules and definitions.

Delhi NCR, including specified areas such as Gurgaon/Gurugram, falls within the metropolitan-city definition for this purpose.

Therefore, a property cannot qualify for the 1% rate merely because its carpet area is within the prescribed limit. The applicable conditions must be considered together.

GST on Under-Construction Residential Property

For qualifying under-construction residential apartments sold by a promoter, the effective GST rates are generally:

Property Type	GST Rate	ITC	Key Condition
Affordable residential apartment	1%	Not available	Must satisfy applicable affordable-housing conditions
Other residential apartment	5%	Not available	Applicable to qualifying residential construction
Ready-to-move property covered by exemption	Nil	—	Completion certificate/first occupation conditions apply

The 1% and 5% rates are effective rates after the prescribed treatment of the land component and are subject to the conditions of the relevant notification.

GST on Ready-to-Move-In Property

A common question among homebuyers is whether GST is payable when purchasing a completed flat.

Generally, where the entire consideration is received after issuance of the completion certificate, where required, or after first occupation, whichever is earlier, the transaction is outside the GST levy applicable to construction services.

However, buyers should distinguish GST from stamp duty and registration charges, which are state-level levies and continue to apply according to the applicable state laws.

The timing of payment and the status of the project can therefore be important when determining GST liability.

GST 2.0 and the Real Estate Sector

The GST rate rationalisation announced in 2025 affected several goods and services used in construction.

For example, the GST rate on cement was reduced to 18%, which can reduce the tax component of an important construction input. The GST Council’s 56th-meeting reforms were aimed at rationalising rates and simplifying the wider GST structure.

However, lower GST on construction inputs does not automatically mean that the GST charged to a homebuyer on an under-construction residential apartment has fallen. The residential 1% and 5% rates operate under a specific no-ITC framework.

The actual impact on project costs and property prices may therefore vary depending on the developer’s procurement structure, project stage and other costs.

Input Tax Credit for Real Estate Developers

Input Tax Credit (ITC) is an important part of GST compliance.

Under the concessional residential construction scheme, developers generally cannot claim ITC on inputs and input services used for the construction of apartments covered by the 1% or 5% scheme.

This is an important difference from certain other taxable construction and commercial supplies where ITC may be available, subject to the conditions of the GST law.

Developers should therefore maintain accurate records and determine ITC eligibility separately for different projects and supplies rather than applying one rule across their entire business.

GST Reverse Charge in Real Estate

Reverse Charge Mechanism (RCM) shifts the responsibility for paying GST from the supplier to the recipient for specified supplies.

Real estate businesses may encounter RCM in situations specifically notified under GST law. For example, the GST framework contains provisions relating to certain purchases from unregistered suppliers and specific construction-related supplies.

The rules should not be simplified to say that all architect fees, small jobs or purchases from unregistered suppliers automatically attract RCM. The exact nature of the supply, supplier status and applicable notification must be examined.

The GST Council has also introduced changes concerning the reverse-charge treatment of certain commercial-property rentals. Taxpayers should check the applicable notification and their registration status before determining who is responsible for GST.

E-Invoicing for Real Estate Businesses

E-invoicing is an important part of GST compliance for eligible businesses.

The e-invoicing mandate has been extended to taxpayers with aggregate annual turnover of ₹5 crore or more, subject to the applicable conditions and exemptions. The requirement applies from 1 August 2023 for the notified category.

Under the e-invoicing system, eligible invoices are reported to the Invoice Registration Portal (IRP), which generates an Invoice Reference Number (IRN) and QR code.

For real estate businesses, proper integration between accounting software and GST systems can help reduce errors in invoice reporting and reconciliation.

GST Compliance Checklist for Builders and Developers

Developers can strengthen their GST compliance by following a systematic process:

• Maintain accurate project-wise accounting records.
• Reconcile purchase invoices and eligible ITC regularly.
• Verify supplier GST details and invoices.
• Determine whether the project falls under the 1%/5% residential scheme or another applicable rate.
• Monitor RCM obligations separately.
• Generate e-invoices where applicable.
• Reconcile GST returns with accounting records.
• Maintain proper documentation for construction-related expenses.
• File GST returns within the applicable deadlines.
• Review changes in GST notifications and circulars regularly.

Digital accounting and GST tools can make reconciliation easier, but businesses remain responsible for ensuring that their returns and supporting records are accurate.

Benefits for Buyers

For homebuyers, understanding GST can help avoid confusion while comparing properties.

Before purchasing an under-construction property, buyers should check:

1. Whether the property is affordable housing under the GST definition.
2. Whether the quoted price includes GST.
3. Whether the property is under construction or has received the required completion/occupation certificate.
4. Whether GST is being charged at the applicable rate.
5. Whether stamp duty and registration charges are included separately.
6. Whether the builder’s invoice clearly identifies the applicable tax.

Buyers should also retain agreements, invoices and payment records as part of their property documentation.

GST and Property Rentals

GST treatment also differs between residential and commercial rentals.

Certain residential renting arrangements can be exempt or subject to specific rules, while renting of commercial or other immovable property to a registered person may attract GST under the applicable provisions, including reverse-charge rules in specified circumstances.

Therefore, landlords and tenants should not assume that every rental transaction has the same GST treatment. The type of property, nature of the tenant and registration status should be examined before determining the applicable tax.

Conclusion

GST has an important role in India’s real estate and construction sector, but the tax treatment depends heavily on the type of property, stage of construction, nature of the supply and applicable GST notifications.

Under the current framework, qualifying under-construction residential apartments generally fall under the 1% or 5% concessional rates without ITC, while completed-property transactions meeting the prescribed conditions are generally outside GST.

GST 2.0 has also changed the tax treatment of several construction inputs, including cement, which can affect project costs. At the same time, developers must continue to comply with requirements relating to invoicing, ITC, reverse charge, reconciliation and e-invoicing.

For buyers and developers alike, understanding the applicable rules before entering into a transaction can help prevent tax errors and unexpected liabilities.

How TaxAcumen Can Help

GST compliance in the real estate sector can become complicated because different rates and conditions may apply to residential projects, commercial properties, construction services, rentals and other transactions.

The professionals at TaxAcumen can help businesses and property stakeholders understand applicable GST provisions, review compliance requirements, assess tax treatment and maintain appropriate documentation.

Contact TaxAcumen for professional assistance with GST, real estate taxation and compliance requirements.

Disclaimer: The information provided in this article is for general informational and educational purposes only and does not constitute tax, legal, financial, investment, accounting, or other professional advice. Laws, regulations, tax provisions, and financial information are subject to change and may vary based on individual circumstances. While every effort has been made to provide accurate and up-to-date information, readers should verify the applicable provisions and consult a qualified professional before making any decision or taking any action based on this content. TaxAcumen is not responsible for any loss or consequence arising from reliance on the information provided.

Receiving a notice from the Income Tax Department can be stressful, but it does not necessarily mean that something is wrong with your tax return. Notices may be issued for routine processing, verification, discrepancies in reported information, or requests for additional details.

However, an income tax notice should never be ignored. Understanding the reason for the notice, gathering the relevant documents and submitting an appropriate response within the prescribed time can help prevent unnecessary complications, additional demands or further proceedings.

Why Notices Are Issued and Common Types

The Income Tax Department may issue a notice even after you have filed your return and paid your taxes. Common reasons include discrepancies in tax-credit information, differences between the income reported in your ITR and information available with the department, errors in the return, high-value transactions, or the need for additional information or verification.

Some commonly encountered notices and communications include:

• Intimation under Section 143(1): This is issued after the department processes your return. It may show adjustments arising from apparent errors, incorrect claims or discrepancies identified during processing. It can result in a refund, a tax demand or no additional tax liability.
• Notice under Section 143(2): This indicates that the return has been selected for scrutiny. The taxpayer may be required to provide information, explanations or supporting documents relating to the return.
• Notice under Section 139(9): This is issued when the Income Tax Department considers a return to be defective. The taxpayer is generally required to rectify the defect within the time specified in the notice. The prescribed response period should therefore be checked carefully rather than assuming a fixed period.
• Notice under Section 142(1): The department may issue this notice to seek additional information, documents or clarification during assessment proceedings. The notice will specify what information is required and the applicable response deadline.
• Notice under Section 156: This is a notice of demand issued when tax, interest, penalty or another amount is payable. The applicable demand should be examined carefully, and payment or an appropriate response should be made within the specified period.
• Notice under Section 148: Under the applicable reassessment provisions, a notice under Section 148 may be issued when the Assessing Officer proposes to reassess income that is believed to have escaped assessment, subject to the conditions and procedures prescribed under the law.
• Notice under Section 245: This provision relates to adjustment of a refund against outstanding tax demands, subject to the applicable procedure. If you receive such a communication, verify the outstanding demand and respond appropriately if you disagree with it.

How to Respond to an Income Tax Notice

The first step is to read the notice carefully and identify the assessment year, section under which it has been issued, issue involved, information requested and response deadline.

Taxpayers should also verify the authenticity of the communication and check the notice or proceeding through the official Income Tax e-filing portal.

For notices requiring an online response, log in to the Income Tax e-filing portal and access the relevant proceedings under the applicable section, such as Pending Actions / e-Proceedings, depending on the type of notice and the portal workflow currently applicable.

Select the relevant proceeding and follow the instructions provided for submitting your response.

Depending on the nature of the notice, you may need to:

• Provide a written explanation addressing the specific issue raised.
• Upload supporting documents such as bank statements, Form 16, tax-payment challans, investment documents or other relevant records.
• Accept or disagree with an observation or proposed adjustment, where the proceeding provides those options.
• For a tax demand, review the demand carefully and select the appropriate response option if you believe the demand is incorrect or only partly correct.
• Provide documentary evidence supporting your explanation wherever required.

Responding to High-Value Transaction Queries

If the department seeks an explanation regarding a high-value transaction, the taxpayer should identify the actual source of the funds and provide appropriate supporting evidence.

For example, if a transaction was funded through accumulated savings, a loan, a gift or another legitimate source, relevant documentation should be maintained and submitted where required.

The explanation should be consistent with the taxpayer’s bank records, income disclosures and other financial information. Avoid providing unsupported explanations simply to close the proceeding.

Keep Records of Your Response

After submitting the response, retain the acknowledgement, reference number, submitted explanation and copies of all documents uploaded.

Where the particular proceeding requires verification or authentication, complete the applicable verification process using the method available on the e-filing portal.

Maintaining a complete record can be valuable if the department raises a further query or if you need to refer to the response in future proceedings.

What to Do If You Disagree With the Notice

You do not necessarily have to accept every observation or demand made by the Income Tax Department.

If you believe the notice is based on incorrect information, a tax-credit mismatch or an error in the department’s records, review the relevant documents and provide a clear explanation with supporting evidence.

For example, compare your ITR with your Form 26AS, AIS, TIS, Form 16, bank statements and tax-payment records, as applicable.

If the matter involves a substantial tax demand, scrutiny proceedings, reassessment or a complex legal issue, obtaining professional tax advice before responding can help ensure that your position is presented accurately.

Conclusion

Receiving an income tax notice is not necessarily a cause for panic, but it does require careful and timely action. Start by identifying the type of notice, understanding the issue raised and checking the prescribed response deadline.

Gather the relevant documents, prepare a clear response and submit it through the appropriate channel specified in the notice. Keeping complete records of the communication and your response can also help with any future proceedings.

Most importantly, do not assume that every notice has the same response period or procedure. Always follow the specific instructions and deadline stated in the notice.

How TaxAcumen Can Help

Dealing with an income tax notice can be complicated, particularly when it involves discrepancies, scrutiny, reassessment or a significant tax demand.

The professionals at TaxAcumen can assist you in reviewing the notice, understanding the issue, gathering relevant supporting documents and preparing an appropriate response through the Income Tax e-filing portal.

Disclaimer: The information provided in this article is for general informational and educational purposes only and does not constitute tax, legal, financial, investment, accounting, or other professional advice. Laws, regulations, tax provisions, and financial information are subject to change and may vary based on individual circumstances. While every effort has been made to provide accurate and up-to-date information, readers should verify the applicable provisions and consult a qualified professional before making any decision or taking any action based on this content. TaxAcumen is not responsible for any loss or consequence arising from reliance on the information provided.

For Indian taxpayers who continue to opt for the old tax regime, Section 80C of the Income Tax Act remains an important tax-saving provision. It allows eligible taxpayers to claim deductions of up to ₹1.5 lakh in a financial year on specified investments and expenses.

Although the new tax regime has reduced the relevance of Section 80C for many taxpayers, the provision continues to be valuable for those who choose the old regime. However, tax-saving investments should be selected based on your financial objectives, risk appetite and liquidity requirements—not solely to reduce your tax liability.

Understanding Section 80C and Its Relevance

Section 80C allows eligible individuals and Hindu Undivided Families (HUFs) to claim deductions for specified investments, savings and expenses. The combined deduction available under Section 80C, along with certain related provisions such as Sections 80CCC and 80CCD(1), is subject to an overall limit of ₹1.5 lakh in a financial year.

The benefit is generally available under the old tax regime, subject to the applicable conditions. Taxpayers should therefore compare their tax liability under both regimes before making investments specifically for tax-saving purposes.

Top 10 Tax-Saving Instruments Under Section 80C

Here are ten popular options that can help eligible taxpayers utilise their Section 80C limit:

1. Employees’ Provident Fund (EPF)

EPF is a retirement savings scheme primarily applicable to salaried employees. The employee’s eligible contribution to EPF qualifies for deduction under Section 80C, subject to the overall limit.

EPF provides retirement-oriented savings and is generally considered a relatively low-risk investment option. Since EPF contributions may already consume part of your ₹1.5 lakh limit, check your annual contribution before making additional investments.

2. Public Provident Fund (PPF)

PPF is a government-backed long-term savings scheme with a 15-year maturity period, subject to the applicable withdrawal and extension rules.

It is suitable for investors looking for long-term, relatively low-risk savings. PPF also offers favourable tax treatment, with eligible contributions qualifying under Section 80C and interest generally being exempt from tax, subject to prevailing rules.

3. Equity Linked Savings Scheme (ELSS)

ELSS mutual funds invest primarily in equities and have a three-year lock-in period, making them one of the shortest lock-in options among Section 80C investments.

They can be suitable for investors seeking long-term capital growth and who are comfortable with market-related risks. Unlike fixed-income tax-saving options, ELSS returns are not guaranteed.

4. National Savings Certificate (NSC)

NSC is a government-backed fixed-income savings instrument with a five-year maturity period.

It can be suitable for conservative investors who prefer a relatively predictable fixed-income investment. Interest is taxable, although the interest that qualifies for reinvestment may receive Section 80C treatment subject to the applicable conditions.

5. Sukanya Samriddhi Yojana (SSY)

Sukanya Samriddhi Yojana is designed specifically for the long-term financial needs of an eligible girl child.

It can be useful for parents or guardians planning for future education and other major financial requirements of their daughter. Eligible contributions qualify for Section 80C deductions, subject to the scheme’s rules.

6. Life Insurance Premiums

Premiums paid towards eligible life insurance policies can qualify for a Section 80C deduction, subject to applicable conditions and limits.

However, life insurance should primarily be purchased to provide financial protection to your family. Tax savings should be considered an additional benefit rather than the main reason for buying a policy.

7. Home Loan Principal Repayment

Eligible repayment of the principal component of a housing loan can qualify for deduction under Section 80C, subject to the prescribed conditions.

This can be particularly useful for taxpayers who are already repaying a home loan because the same payment can contribute towards debt repayment as well as tax planning.

8. Tuition Fees for Children

Certain tuition fees paid for the full-time education of up to two children can qualify for deduction under Section 80C, subject to the conditions prescribed under the Income Tax Act.

The payment must generally be towards eligible tuition fees of an educational institution in India. Other charges, such as development fees or donations, may not qualify.

9. Tax-Saving Fixed Deposits

Tax-saving fixed deposits offered by eligible banks provide a familiar fixed-income investment option. They generally have a five-year lock-in period.

The investment can qualify for Section 80C deduction, subject to the overall limit. However, the interest earned on the FD is taxable, so investors should consider their post-tax returns rather than looking only at the advertised interest rate.

10. Voluntary Provident Fund (VPF)

VPF allows eligible salaried employees to voluntarily contribute more to their provident fund beyond their mandatory EPF contribution.

Eligible employee contributions can qualify for Section 80C, subject to the overall ₹1.5 lakh limit and applicable rules. VPF can be useful for employees seeking to increase their retirement savings without choosing a separate investment product.

Choosing the Right Section 80C Strategy

There is no single investment strategy that works for every taxpayer. The right combination depends on your income, existing investments, financial goals, risk tolerance and liquidity needs.

For example:

• Retirement-focused investors: EPF, VPF and PPF
• Growth-oriented investors: ELSS
• Conservative investors: PPF, NSC and tax-saving FDs
• Girl-child financial planning: Sukanya Samriddhi Yojana
• Homeowners with an eligible housing loan: Home-loan principal repayment
• Parents: Eligible children’s tuition fees
• Family protection: Eligible life insurance premiums

It is also important to remember that your ₹1.5 lakh limit may already be partly utilised through EPF, home-loan principal repayment, insurance premiums or children’s tuition fees. Before making a fresh investment, calculate how much of the limit is actually available.

Conclusion

Section 80C remains a useful tax-planning provision for taxpayers who choose the old tax regime. Its range of eligible investments and expenses allows taxpayers to combine tax planning with objectives such as retirement savings, children’s education, debt repayment and long-term wealth creation.

However, tax saving should not be the only reason to invest. A product with a tax benefit may not necessarily be the right investment for your financial situation. Assess your goals, investment horizon, risk tolerance and liquidity requirements before choosing an instrument.

Planning early can help you make better investment decisions, utilise available deductions efficiently and avoid last-minute investments made solely to reduce your tax liability.

How TaxAcumen Can Help

Choosing the right tax-saving strategy can be challenging, particularly when you need to balance tax efficiency with liquidity, risk and long-term financial goals.

The professionals at TaxAcumen can help you evaluate your tax position, compare the old and new tax regimes, identify eligible deductions and develop a tax-saving strategy aligned with your financial objectives.

Contact TaxAcumen to schedule a consultation and plan your tax-saving investments well in advance.

Disclaimer: The information provided in this article is for general informational and educational purposes only and does not constitute tax, legal, financial, investment, accounting, or other professional advice. Laws, regulations, tax provisions, and financial information are subject to change and may vary based on individual circumstances. While every effort has been made to provide accurate and up-to-date information, readers should verify the applicable provisions and consult a qualified professional before making any decision or taking any action based on this content. TaxAcumen is not responsible for any loss or consequence arising from reliance on the information provided.

The majority taxpayers believe that the procedure is completed after they submit their ITR through the portal. However, the return is only considered valid if it is e-verified within 30 days of the filing date. However, if you neglect or postpone verification, your return may be considered invalid, and you might face fines, delayed refunds, or even a notice from the Income Tax Department. You can stay out of trouble by being aware of the 30-day rule and its consequences.

Why E-Verification Is Required and How It Works

E-verification confirms that the information you submitted in your income tax return (ITR) is valid and that you have given your approval to it. If this step is not completed, the Income Tax Department may reject your return as legally filed. The department provides several options for carrying out the verification:

• Aadhaar OTP: The most popular approach is Aadhaar OTP. An OTP is sent to your registered phone number if your PAN is connected to Aadhaar.
• Internet Banking EVC: You can generate an Electronic Verification Code through your bank’s net banking page.
• Digital Signature Certificate (DSC): Companies, professionals, and taxpayers who already possess a Digital Signature Certificate (DSC) are the most common users.
• Demat Account EVC: To verify if your Demat account is linked, use CDSL or NSDL.
• ITR-V by Post: If online methods are unsuccessful, you have 30 days to send a signed physical copy of the ITR-V to the Centralised Processing Center (CPC) in Bengaluru.

The window has been reduced from 120 days to just 30 days for taxpayers to verify. This change increases the importance of timely verification.

What Happens If You Verify After 30 Days?

The filing date has been changed, but the return is still accepted if you verify your ITR after the 30-day period. The department uses the verification date as your actual filing date rather than the original submission date. This change may lead to a number of common issues:

• Late Filing Fee: You may be required to pay a late fee under Section 234F if your initial filing was made prior to the July 31 deadline but verification takes place after 30 days. If your income is less than ₹5 lakh, the cost is ₹1,000; if it exceeds, it is ₹5,000.
• Interest on Unpaid Tax: Section 234A adds interest from the due date until the verification date if you are owing tax and failed to pay it by the initial due date.
• Delayed Refunds: The refund processing will start only after verification. Your refund will be delayed, possibly by months, if the verification is delayed.
• Loss of Carry-Forward Benefits: You lose the option to carry forward business or capital losses (except from house property losses) if verification is made after the belated deadline of December 31.

For instance, the department will use September 5, 2026, as your filing date if you filed your ITR on July 28, 2026, but confirmed it on September 5, 2026. You lose the advantage of timely filing if this date is after July 31.

What Happens If You Completely Forget Verification?

Your ITR will be considered invalid if you do not verify it at all. You seem to have never filed. Penalties, interest on unpaid taxes, and notices for non-filing could arise from this. Under the Income Tax Act of 2025, the department may even start scrutiny or demand proceedings in certain circumstances.

Conclusion

E-verification is an important step. It is the last and required step in filing an ITR. A timely filed return may turn into a late one and incur fees, interest, and delays if the verification is not completed within 30 days. After filing your ITR, always check it right away. For quick validation, use Aadhaar OTP or Net Banking EVC. Send the ITR-V via speed post and save the tracking receipt if you face technical issues.You can avoid major problems later by taking a little step today.

How TaxAcumen Can Help

Navigating e-verification timelines and compliance rules under the Income Tax Act, 2025, doesn’t have to be overwhelming. At TaxAcumen, our experts ensure your returns are correctly filed, verified, and aligned with current regulations. Get in touch today to secure your financial standing.

Disclaimer: The information provided in this article is for general informational and educational purposes only and does not constitute tax, legal, financial, investment, accounting, or other professional advice. Laws, regulations, tax provisions, and financial information are subject to change and may vary based on individual circumstances. While every effort has been made to provide accurate and up-to-date information, readers should verify the applicable provisions and consult a qualified professional before making any decision or taking any action based on this content. TaxAcumen is not responsible for any loss or consequence arising from reliance on the information provided.

Anyone who has ever filed an income tax return knows the small fear of a mismatch notice. After claiming a TDS credit, the department’s records show an error, and all of a sudden you’re chasing a bank or employer for a fix that should have been discovered weeks before. Form 168, which has replaced the previous Annual Information Statement under the Income Tax Act, 2025, is the document that helps identify this before it becomes a notice as of April 1st, 2026.

What Form 168 Actually Is

Form 168 is prescribed under Rule 245 of the Income Tax Rules, 2026, and uploaded under Section 510 of the new Act. It’s an auto-generated statement sitting in your registered e-filing account, pulling together TDS and TCS entries, specified financial transactions, tax payments, refunds, demands, and details of pending or completed proceedings. You don’t prepare or file it yourself; the department generates it based on what employers, banks, and other reporting entities submit against your PAN.

For anyone used to the older AIS, the shift is largely one of name and legal basis rather than function. AIS continues for periods governed by the 1961 Act, up to Assessment Year 2026-27, while Form 168 takes over from Tax Year 2026-27 onwards. TDS deducted in March 2026 still shows up in the older AIS. Anything deducted from April 2026 flows into Form 168 instead.

How to Reconcile TDS Entries

Reconciliation really comes down to comparing what Form 168 shows against what you already know from your own paperwork. A few practical steps make this easier:

• Pull every TDS or TCS certificate you’ve received during the year, whether from an employer, a bank, a tenant, or a property buyer.
• Match each certificate’s deducted amount and deposit date against the corresponding entry in Form 168.
• Check that the PAN, the Tax Year, and the nature of payment listed in Form 168 line up correctly with your own records
• Flag any TDS you know was deducted but doesn’t appear in the statement yet, since reporting entities upload information within 90 days of receiving it, not instantly.

A gap here often points to a delay on the deductor’s side rather than an error on your part, but it still needs chasing before you file your return, since an unreflected credit simply can’t be claimed.

What to Do When Something Doesn’t Match

If an entry looks wrong, the fix has to happen at the source. Contacting the employer, bank, or other deductor and asking them to correct their original TDS statement is the only way the figure in Form 168 actually changes. Typing a different number directly into your return doesn’t correct the underlying record, and it can create exactly the kind of mismatch that draws a notice later. Keep your certificates and bank statements on hand while this gets sorted, since you’ll likely need to show them to the deductor or, if it comes to it, to the department.

Conclusion

Form 168 provides you with a single spot to verify whether the TDS you anticipate matches what the department has on file; nevertheless, it is best used as a starting point for verification rather than a definitive response. By going over your certificates line by line, identifying any gaps early, and sending revisions back to the source before submitting, you can transform what could have been a stressful notice later into a routine check now.

Disclaimer: The information provided in this article is for general informational and educational purposes only and does not constitute tax, legal, financial, investment, accounting, or other professional advice. Laws, regulations, tax provisions, and financial information are subject to change and may vary based on individual circumstances. While every effort has been made to provide accurate and up-to-date information, readers should verify the applicable provisions and consult a qualified professional before making any decision or taking any action based on this content. TaxAcumen is not responsible for any loss or consequence arising from reliance on the information provided.

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.

A tenant paying rent above a certain threshold has always carried one extra responsibility beyond just paying the landlord on time. They had to deduct tax at source, deposit it with the government, and hand over a certificate proving it. That certificate used to be Form 16C. Since 1st April 2026, under the Income Tax Act, 2025, it is known as Form 132.

What Form 132 Actually Replaces

Form 132 isn’t a straight swap for Form 16C alone. It’s a consolidated certificate issued under Section 395(4) of the Income Tax Act, 2025, merging four older certificates into one, Form 16B for property transactions, Form 16C for rent, Form 16D for contractor and professional payments, and Form 16E for virtual digital asset transfers. A tenant issuing this certificate now uses the same form number a property buyer or a crypto trader would use, just for a different schedule of the corresponding filing.

For rent, the certificate ties back to Schedule A of Form 141, the challan-cum-statement that also replaced the older Form 26QC. The tenant deducts TDS, files Form 141 under Schedule A, and once that filing is processed, Form 132 gets generated to hand over to the landlord.

Who Needs to Issue It and When

The obligation applies to individuals and HUFs not liable to a tax audit, paying monthly rent above Rs 50,000 to a resident landlord. Two things are worth flagging here, since they haven’t changed even though the paperwork has:

• The TDS rate on this rent is 2 percent, a figure that came down from 5 percent back in October 2024, and it carries forward unchanged into the new Act.
• If the landlord doesn’t share their PAN, the deduction rate jumps to 20 percent instead.

Once TDS is deducted and deposited through Form 141, Form 132 must be issued within 15 days from the due date of that filing. This certificate can only be generated through the TRACES portal, so a document handed over outside that system isn’t considered valid proof.

What This Means in Practice

A tenant paying Rs 60,000 a month in rent still deducts 2 percent of the annual rent, deposits it through Form 141, and then generates Form 132 to give the landlord. The landlord uses this certificate to claim credit for the tax already deducted when filing their own return. If anything on the certificate needs correcting, the tenant has to file a revised statement first, and only then can an updated Form 132 be generated, there’s no separate correction process for the certificate on its own.

Missing the deadline to issue this certificate still carries a penalty, Rs 200 for every day of delay under the provision that replaced the older Section 234E framework. This makes timely filing just as important now as it was under the old system, even though the form name has changed.

Conclusion

Form 132 folds what used to be four separate certificates into one, which genuinely simplifies things for anyone dealing with property, rent, contractor payments, or crypto transactions across different years. For tenants specifically, the deduction rate, the threshold, and the underlying obligation remain exactly as before; only the certificate’s name and its route through Form 141 have shifted. Getting comfortable with this new pairing, one filing followed by one certificate, is really all that’s needed to stay compliant going forward.

For years, a mismatched PAN or a wrongly entered challan number in a TDS return wasn’t something deductors lost sleep over. There was always time to go back and fix it, sometimes years later. That comfort disappeared on 1st April 2026. Under the Income Tax Act, 2025, correction statements for TDS and TCS returns can now only be filed within two years from the end of the tax year in which the original statement was due. What used to be a six-year window has shrunk considerably, and understanding exactly how this works matters for anyone still holding onto old, uncorrected filings.

Why the Window Got Shorter

The earlier system let deductors revise a TDS return almost indefinitely, and in practice, corrections often came in two, three, or even five years after the original filing. This created its own set of problems, unresolved mismatches lingering for years, deductees stuck without proper credit, and a backlog that made audits harder to conduct cleanly. Section 397(3)(f) of the new Act addresses this by setting a firm two-year cutoff, counted from the end of the tax year in which the original statement was due.

The change isn’t just a policy preference sitting in guidance notes, it’s now written directly into law, replacing the earlier six-year practice that existed under the 1961 Act.

How This Affects Older Returns

The transition carries a real deadline that deductors needed to act on before 31st March 2026. Correction statements for the following periods were only accepted up to that date:

• Q4 of FY 2018-19
• All quarters of FY 2019-20 through FY 2022-23
• Q1 to Q3 of FY 2023-24

From 1st April 2026 onwards, none of these can be corrected anymore. They’re considered time-barred, and TRACES simply won’t process a correction request for them, no matter how small or genuine the error.

The rule moves forward on a rolling basis. During the period from April 2026 to March 2027, corrections are allowed only from Q4 of FY 2023-24 onwards. Once April 2027 arrives, the earliest year eligible for correction shifts again, to Q4 of FY 2024-25. Each passing year quietly closes the door on one more year’s worth of filings.

What Happens If a Correction Is Missed

Letting the two-year window lapse isn’t a minor inconvenience. A few consequences follow directly:

• Deductees may be stuck with unresolved mismatches, which can delay or block their tax credit
• Penalties ranging from Rs 10,000 to Rs 1,00,000 can apply, depending on how serious the underlying default is
• Uncorrected statements increase exposure during tax audits, since there’s no longer a route to fix them later

None of this is retroactively fixable once the window closes, which is precisely the point of the change. The earlier flexibility is gone, and accuracy now needs to happen closer to the time of filing rather than being patched up years down the line.

Conclusion

Instead of depending on an uncontrolled safety net, the two-year correction window encourages TDS compliance to do things right the first time. Deductors who are waiting on old, unfixed mistakes from previous years have already missed the opportunity to correct a number of them, and the ones that are still fixable will close on a fixed annual cycle. The only practical method to stay ahead of this transition is to include a routine reconciliation and check PANs, challans and deductee details long before the two-year deadline.

Under the Income Tax Act of 2025, the new quarterly statement for tax deducted at source on non-salary payments is called Form 140. It is now the primary form required by Section 397(3)(b) for businesses and other deductors to report TDS on payments made to resident taxpayers.

The general concept is still recognisable. You still have to record who you paid, what you paid, the amount of tax you deducted, and how the tax was deposited. The form’s format and the deadlines for fixing any errors have changed.

What Form 140 Covers

Form 140 is used for TDS on various non salary payments made to resident taxpayers. It applies to a broad range of transactions:

• Interest other than interest on securities
• Payments to contractors and subcontractors
• Commission and broking
• Rent paid for land, buildings, plant, or machinery
• Professional fees and technical service fees
• Dividend payments
• Any other resident payment where TDS is required under the Act

The requirement to file Form 140 covers Companies, Partnership firms and LLPs, Government Departments, Banks, Trusts, and Individuals & HUFs who are liable to deduct TDS.

Each quarter, the deductor must file Form 140 to report all relevant non-salary payments and the TDS deducted on those payments.

The form collects basic details of the deductor, information about the challans used to deposit TDS, deductee-wise details for each transaction.

This is similar to the old Form 26Q, but the layout is more unified, and there are fewer separate annexures to handle.

Due dates and filing process

The quarterly due dates for Form 140 are the same as they were for Form 26Q:

• Quarter 1, April to June: due by 31 July
• Quarter 2, July to September: due by 31 October
• Quarter 3, October to December: due by 31 January
• Quarter 4, January to March: due by 31 May of the following year

There is an appropriate order to the filing process:

1. Compile all of the quarter’s non-salary payments that are subject to TDS.
2. Pay close attention to the deductee’s PAN data.
3. Verify that TDS has been timely deposited and deducted at the appropriate rate.
4. Form 140 should be prepared with:
   1. Deductive information
   2. Challan information, including the date of deposit, challan number, and BSR code
   3. Deductee-specific information, such as the kind of payment, amount, and TDS withheld
5. Run the file through the current File Validation Utility and correct any issues that are found.
6. Using an electronic verification code or digital signature, submit the verified statement via the e-filing portal.

The acknowledgement number should be securely saved upon submission. If there are any questions or if a correction statement needs to be submitted later, this number will be required.

Changes from Form 26Q

Although the core purpose of reporting non-salary TDS has not changed, Form 140 introduces some key differences:

• It now operates under Section 397(3)(b) of the Income Tax Act, 2025, instead of Section 200(3) of the earlier law.
• The structure has moved from multiple annexures to a single, standardised format, which makes data entry and review more straightforward.
• Validation checks in the File Validation Utility are stricter. This helps catch mistakes such as wrong PAN entries or incorrect challan references before filing.

Correction statements are still allowed. If an error is found after filing, the deductor can submit a correction statement. However, there is a clear time limit. TDS correction statement can be filed within six years from the end of the financial year in which the TDS statement is required to be furnished, applicable from 1 April 2025.

Once this period is over, the return usually cannot be changed further. Because of this, it is wise to reconcile TDS records, challan details, and deductee information regularly during the year instead of waiting until the last quarter.

Conclusion

Form 140 offers a simple and clear filing format while retaining the reporting functionality of Form 26Q. The change should be easy for deductors that update their systems, check PAN and challan details in advance of deadlines, and adhere to the well-known quarterly due dates.

However, careful and prompt submission is still crucial due to the more stringent validation and short rectification window. It is better to approach Form 140 compliance as a continuous process rather than a year-end duty because late filing or unresolved errors can continue to result in interest, penalties, and other financial consequences.

Disclaimer: The information provided in this article is for general informational and educational purposes only and does not constitute tax, legal, financial, investment, accounting, or other professional advice. Laws, regulations, tax provisions, and financial information are subject to change and may vary based on individual circumstances. While every effort has been made to provide accurate and up-to-date information, readers should verify the applicable provisions and consult a qualified professional before making any decision or taking any action based on this content. TaxAcumen is not responsible for any loss or consequence arising from reliance on the information provided.