Form 130 and Form 138, explained

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. The Income-tax Rules, 2026, notified on 20 March 2026, replaced the 1962 Rules on the same day.

For employers, the substance of salary TDS is much the same. What changes is the vocabulary: new section numbers, new form numbers, and one “tax year” instead of the old “previous year” and “assessment year”.

The renames employers need

What it is	Old name (1961 Act)	New name (2025 Act)
TDS on salary	Section 192	Section 392
Annual TDS certificate for salary	Form 16	Form 130
Quarterly TDS statement for salary	Form 24Q	Form 138
Statement of perquisites	Form 12BA	Form 123
Employee’s claims for deductions (HRA, LTA, interest, investments)	Form 12BB	Form 124
TDS certificate for other payments	Form 16A	Form 131
Quarterly TDS statement for other residents	Form 26Q	Form 140
“Previous year” and “assessment year”	FY 2026-27, AY 2027-28	Tax year 2026-27

When the new names start

The new forms apply to income of tax year 2026-27 (1 April 2026 to 31 March 2027) and later. Anything about 2025-26 or earlier stays under the old Act and its old forms.

So in practice:

• Form 16 for 2025-26 was due by 15 June 2026, under the old Act.
• Form 138 is the quarterly salary statement for 2026-27. The first, for April to June 2026, was due by 31 July 2026. The second, for July to September, is due by 31 October 2026.
• Form 130 for 2026-27 is due by 15 June 2027. It is the first Form 130 most employees will see.
• Form 124 replaces Form 12BB for declarations you collect during 2026-27.

What changes for employers

Form 130 has three parts

Form 16 had two parts. Form 130 has three:

• Part A: the employer’s and employee’s details.
• Part B: a summary of amounts paid or credited, tax deducted and tax deposited.
• Part C: the detailed computation. Annexure I covers salary TDS under section 392; Annexure II covers pension and interest for specified senior citizens.

The certificate is issued under rule 215 of the new Rules, and the Department’s FAQ describes it as issued by the employer each year. It is generated through TRACES once your Form 138 for the year has been processed, then downloaded, signed and given to the employee.

Unsettled: the Department’s guidance says Form 130 comes from TRACES, but we couldn’t confirm whether an employer may still prepare and attach its own detailed computation, as many did with Form 16 Part B. Until that is clear, issue the TRACES-generated certificate and treat any computation of your own as a supporting statement for the employee.

Form 138 is still a quarterly return

Form 138 works like Form 24Q did. Annexure I (deductee-wise details) goes with every quarter. Annexure II (each employee’s full-year salary and tax) goes with the fourth quarter only.

Quarter (2026-27)	Due by
April to June	31 July 2026
July to September	31 October 2026
October to December	31 January 2027
January to March	31 May 2027

Protean’s return preparation and validation utilities were updated for the new forms (version 1.2 covers Forms 138, 140, 143 and 144). If your payroll tool or CA still files “24Q” for 2026-27, the file will be rejected.

Unsettled: as of 15 October 2026, we couldn’t find Protean’s published file layout for the fourth-quarter Form 138 with Annexure II. Expect it before the first Q4 filing in 2027.

Form 124 asks more about rent

Form 124 does the same job as Form 12BB. One addition: an employee claiming HRA exemption must now disclose their relationship with the landlord.

HRA: eight cities at 50%

From tax year 2026-27, the new Rules allow the higher HRA limit (50% of salary) in eight cities: Delhi, Mumbai, Kolkata and Chennai as before, plus Bengaluru, Hyderabad, Pune and Ahmedabad. Other places stay at 40%. HRA exemption is still available only under the old regime.

Example. Vikram works in Pune on basic plus DA of ₹50,000 a month, with HRA of ₹25,000. He pays rent of ₹28,000 and is on the old regime. His exempt HRA is the least of:

• HRA received: ₹25,000;
• rent paid less 10% of salary: ₹28,000 − ₹5,000 = ₹23,000;
• 50% of salary (Pune is now a 50% city): ₹25,000.

Exempt: ₹23,000 a month. Under the old four-city list, the third limit would have been 40% (₹20,000), so ₹3,000 a month more is now exempt.

The section numbers on your payslips and letters

Anything that quotes the law needs updating: payslip tax notes, investment-declaration emails, TDS policies, and letters to employees. “Section 192” becomes “section 392”, and the 80C-style deductions now sit under new section numbers too (section 80C, for example, is now section 123).

What to check

1. Your payroll tool labels 2026-27 forms with the new names, and keeps old names for 2025-26 corrections.
2. Q2 Form 138 for July to September 2026 is filed by 31 October 2026, using Protean’s current utility.
3. Declarations for 2026-27 are collected on Form 124, with the landlord disclosure for HRA.
4. Perquisites are reported on Form 123.
5. The HRA city list includes the four new 50% cities from April 2026.
6. Employee communications explain that “Form 16” is now “Form 130”, so nobody is alarmed in June 2027.

How Dexta handles this

• Monthly TDS on salary. Dexta Pay projects the year’s income and spreads the tax evenly over the months left, with late TDS interest worked out if a deposit goes in after the due date.
• The new HRA list. Pay uses the 2026 list of eight 50% cities.
• Form 123. Pay produces the statement of perquisites as a PDF for each employee.
• The tax computation. Pay gives each employee the year’s tax computation in the layout of Form 130 Part C, downloadable any time, and can join it to the Part A you download from TRACES while keeping the Department’s signature intact.
• Employee self-service. In My Tax, employees declare, compare the two regimes, upload proofs and download their tax forms.
• Old and new labels. Dexta Books switches section and form names to the Income-tax Act 2025 from tax year 2026-27.

This is general guidance, not legal advice.