If you deduct Tax Deducted at Source (TDS) from an employee’s salary, simply depositing the tax with the government is not enough. You must also report the deduction to the Income Tax Department through a quarterly TDS statement. This is done by filing Form No. 138.
Form No. 138 helps the government match the tax deducted by employers with the tax credit claimed by employees. It also ensures that employees receive the correct TDS credit in their Annual Information Statement (AIS) and while filing their Income Tax Return (ITR). Understanding when and how to file Form 138 can help employers avoid defaults and ensure smooth tax compliance.
What is Form No. 138?
Form No. 138 is a quarterly TDS statement that employers file to report the Tax Deducted at Source (TDS) from salaries paid to employees under Section 392 (other than Section 392(7)) of the Income Tax Act, 2025. It is also used by specified banks to report TDS deducted on pension and interest income paid to specified senior citizens under Section 393(1) [Table: Sl. No. 8(iii)].
The form is filed under Rule 219 of the Income-tax Rules, 2026. It gives the Income Tax Department complete details of the tax deducted from each deductee and the tax deposited with the Central Government. This information is later used to provide TDS credit to the taxpayer.
In simple words, whenever you as an employer deduct tax from employee’s salary, you need to inform the Income Tax Department about:
- How much salary you paid
- How much tax you deducted
- When you deposited that tax
This reporting is done through Form No. 138.
This form replaces the earlier Form 24Q under the new Income-tax framework. So if you’ve heard about 24Q before, just think of Form 138 as its updated version.
Who is required to file Form No. 138?
Every person responsible for deducting TDS on salary or specified pension-related payments must file this form. The filing requirement is not limited to companies alone.
The following persons are required to file Form No. 138:
- Every employer, including companies, firms, government departments, and other employers, who deduct TDS from salary payments.
- Specified banks that deduct TDS on pension and interest income paid to specified senior citizens.
If you are deducting TDS under the applicable provisions of the Income Tax Act, filing Form No. 138 every quarter becomes a mandatory compliance requirement.
Note: The key idea here is simple, If you deduct tax, you must report it.
When should Form No. 138 be filed? (Due Dates Explained)
Form No. 138 is filed once every quarter.
Each statement covers TDS deducted during that particular quarter and must be submitted within the prescribed due date.
Table showing Form 138 Quarterly Due Dates
| Quarter | Period Covered | Due Date for Filing |
|---|---|---|
| Q1 | April – June | 31st July of the Financial Year |
| Q2 | July – September | 31st October of the Financial Year |
| Q3 | October – December | 31st January of the Financial Year |
| Q4 | January – March | 31st May of the Financial Year immediately following the Tax Year |
These dates are very important because delay can lead to penalties. In practical life, many small businesses miss deadlines simply due to lack of awareness. Staying updated here can save unnecessary penalties.
What information is included in Form No. 138?
Form No. 138 is divided into different parts and annexures so that both deductor-level and deductee-level information can be reported accurately.
Part A – Particulars of the Deductor
This section captures the identity and contact details of the deductor as well as the person responsible for deducting tax.
It includes details such as:
- Type of deductor.
- Name and address.
- PAN and TAN.
- Contact information.
- Name, address, PAN, and contact details of the person responsible for deduction of tax.
This information helps the Income Tax Department identify the deductor and link the statement correctly.
Part B – Details of Tax Deducted and Deposited
This section reports how much tax has been deducted and deposited with the Central Government.
It includes information such as:
- Total tax deducted.
- Interest and fee, if applicable.
- Mode of payment.
- BSR Code.
- Date of deposit.
- Challan Serial Number.
- Minor Head and other challan-related details.
These details help verify whether the deducted tax has actually been deposited.
Annexure I – Deductee-wise TDS Details
Annexure I is mandatory for all four quarters.
It provides deductee-wise information, including:
- PAN and name of the deductee.
- Section Code.
- Amount paid or credited.
- Date of payment or credit.
- Tax deducted.
- Tax deposited.
- Date of deduction.
- Rate of deduction.
- Reason for non-deduction, lower deduction, or higher deduction, where applicable.
- Certificate Number under Section 395(1), wherever applicable.
This annexure forms the foundation for granting TDS credit to each deductee.
Annexure II – Salary Summary
Annexure II is filed only with the Q4 statement.
It provides a complete annual summary for each employee, including:
- Salary details.
- Deductions.
- Rebate.
- Net tax liability for the Tax Year.
Since this annexure contains the final salary computation, it plays an important role in preparing the employee’s TDS certificate and income tax records.
Annexure III – Pension and Interest Summary
Annexure III is also filed only with the Q4 statement.
It is applicable to specified banks and contains:
- Pension income.
- Interest income.
- Deductions.
- Rebate.
- Net tax payable for the Tax Year of the specified senior citizen.
This ensures that the annual tax details of eligible senior citizens are correctly reported.
What documents and information are required before filing Form No. 138?
Before preparing the quarterly statement, the deductor should keep the necessary records ready. Having complete information reduces the chances of validation errors.
The required documents and details include:
- Copies of challans through which TDS has been deposited to the credit of the Central Government.
- PAN details of all deductees.
Accurate PAN and challan information are especially important because they determine whether TDS credit reaches the correct taxpayer.
What is the step-by-step process to file Form No. 138?
The filing process follows a series of steps, beginning with TDS deduction and ending with processing by the Central Processing Centre (CPC-TDS).
First, the employer deducts TDS from salary payments under Section 392 (other than Section 392(7)). Similarly, specified banks deduct TDS on eligible pension and interest income under Section 393(1) [Table: Sl. No. 8(iii)].
After deducting tax, the amount must be deposited with the credit of the Central Government within the due dates prescribed under Rule 218 of the Income-tax Rules, 2026.
The quarterly TDS statement is then prepared using the Return Preparation Utility (RPU) provided by TIN-NSDL.
The filing requirements are slightly different depending on the quarter.
- For Q1, Q2, and Q3, only Annexure I is prepared and filed.
- For Q4 salary statements, Annexure II must also be prepared to provide salary, deductions, exemptions, and related annual details.
- In the case of specified senior citizens, specified banks must prepare Annexure III in Q4 to report pension and interest income details.
Once the statement is prepared, it must be validated using the File Validation Utility (FVU). If no validation errors are found, the utility generates a .fvu file.
The generated .fvu file can then be submitted in either of the following ways:
- Upload it online through the Income Tax e-filing portal.
- Submit it physically at a TIN Facilitation Centre (TIN FC).
After successful submission, the statement is received by CPC-TDS, where it is processed according to the provisions of the Income Tax Act.
What happens after Form No. 138 is processed?
Once the statement is processed, the outcome affects both the deductor and the deductees.
What is the outcome for the deductor?
After processing, the statement may either be accepted without any default or processed with defaults. If defaults are identified, the deductor may have to:
- Pay the applicable default amount, where required.
- File a correction statement to rectify the reported errors.
Correct and timely filing helps reduce the need for later corrections.
What is the outcome for employees and other deductees?
The information reported in Form No. 138 is used for several important tax-related records.
After processing:
- TRACES prepares Form No. 130, which is the TDS Certificate for salary, using the information reported in Annexure I and Annexure II.
- The employer must issue Form No. 130 to each employee by 15th June of the following financial year.
- The deducted TDS is reflected in the employee’s Form No. 168 (AIS) as “TDS by employer.”
- Employees can use this TDS credit while filing their Income Tax Return (ITR).
- The salary details appearing in the employee’s ITR are taken directly from Annexure II of Form No. 138 filed by the employer for the fourth quarter.
This makes accurate reporting extremely important because any mistake in the quarterly statement can affect an employee’s tax credit and income tax return.
Can Form No. 138 be revised or corrected later?
Yes, but not directly.
Once submitted, the form cannot be edited. However, you can file a correction statement after processing.
There is also a time limit: Correction can be filed within 2 years from end of tax year
This means you do get a chance to fix errors, but only within a defined time.
Is it mandatory to file Form No. 138 online?
Yes, it is mandatory.
All TDS statements, including Form No. 138, must be filed electronically.
This shift makes the system more transparent and reduces manual errors.
Why is timely and accurate filing important?
This is something many beginners ignore—but it has real consequences.
Filing correctly and on time helps in:
- Passing correct tax credit to employees
- Avoiding employee complaints
- Preventing penalties and legal issues
If you delay or file incorrectly, you may face:
- Late filing fees
- Penalties under the Income-tax Act
So this is not just compliance—it directly affects both your business and your employees.
Conclusion
Form No. 138 is an important quarterly compliance requirement for employers and specified banks that deduct TDS on salary, pension, or eligible interest income. It not only reports the tax deducted and deposited with the Central Government but also forms the basis for generating TDS certificates, updating the Annual Information Statement (AIS), and allowing taxpayers to claim the correct TDS credit while filing their ITR.
Filing the statement accurately and within the prescribed due dates helps avoid defaults, reduces the need for correction statements, and ensures that deductees receive the tax credit they are entitled to.
Mapping: Income-tax Act, 1961 vs Income-tax Act, 2025 (Form 24Q vs Form 138)
| Particulars | Income-tax Act, 1961 / Rules, 1962 | Income-tax Act, 2025 / Rules, 2026 |
|---|---|---|
| Form Name | Form 24Q | Form 138 |
| Relevant Section (TDS Return Filing) | Section 200(3) | Section 397(3)(b) |
| Relevant Rule | Rule 31A | Rule 219 |
