From 1 April 2026, TDS and TCS payments for Tax Year 2026–27 onward are made under the Income Tax Act, 2025. The payment process on the income tax portal now uses the new Act, Tax Year terminology and updated provision references. For businesses, accountants and tax practitioners, selecting the right options and checking the challan entries before payment can help avoid errors later.
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When to select the Income Tax Act, 2025
The Act you select depends on the period to which the payment relates. The Income Tax Department’s portal guidance says to choose the Income Tax Act, 2025 for payments from Tax Year 2026–27 onward. Payments relating to periods up to and including AY 2026–27, including March 2026, continue under the Income Tax Act, 1961. Income Tax Department
For transactions from 1 April 2026, the relevant provision reference for TDS or TCS also changes. The portal advises using the applicable table item under Section 393 for TDS or Section 394 for TCS, rather than quoting old section numbers such as 194C, 194H or 194J. Income Tax Department
Step 1: Open the e-Pay Tax service
Log in to the income tax e-filing portal and go to:
e-File → e-Pay Tax
Because this guide concerns payments for Tax Year 2026–27, select Income Tax Act, 2025 and continue. Choosing the wrong Act can create a mismatch between the challan details and the reporting requirements for the relevant period.
Step 2: Start a new payment or return to a saved draft
Choose New Payment if you are preparing a challan for the first time. If you previously saved a draft, you can continue it.
The portal also provides access to payment history. Use it to check whether a payment was completed and to retrieve payment details when needed. The portal’s challan guide describes the new payment flow and access to payment history. Income Tax Department
Step 3: Select the tax year and payment type
Choose Tax Year 2026–27 for the payment shown in this guide. Once the tax year is selected, the relevant payment options become available.
Select TDS/TCS and proceed.
Take care to match the period shown on the challan with the period for which tax was deducted or collected. A payment made after 1 April 2026 does not, by itself, determine which Act applies; the period and the timing of the underlying transaction matter.
Step 4: Check the major head and deductee details
On the next screen, check the major head, whether the deductee is a company or another person, and the deductee’s residential status.
The video stresses that these selections affect the provision options presented by the portal and the nature of the challan. Select Resident for a payment to an Indian resident and Non-Resident for a payment to a foreign party or other non-resident.
Pause here and check the details against the transaction. An incorrect selection can result in an unsuitable provision reference or a validation issue when the TDS statement is filed.
Step 5: Find the applicable provision reference
The Income Tax Act, 2025 uses new references for TDS and TCS reporting. The video demonstrates searching for the payment type in the portal and selecting the matching entry.
For example:
- Professional fees: the video explains that professional-fee TDS must be considered when the applicable threshold is crossed.
The Income Tax Department’s current payment guidance gives the reference for a contractor payment example as Section 393(1), Table Serial No. 6(i). The portal’s TDS compliance guidance also says that old section numbers may cause processing errors and that the corresponding new table item should be used. Because provision references can depend on the payment category and deductee details, verify the applicable table item shown for your specific transaction before paying. Income Tax Department
Step 6: Enter the TDS amount and add payment entries
After selecting the relevant provision, enter the tax amount and choose Add Pay. The video illustrates entering a TDS amount of ₹5,000 for a professional payment.
To add another TDS payment, select its relevant provision, enter its amount and choose Add Pay again. The entries and amounts then appear together on the payment page.
The video highlights that the new process allows multiple TDS and TCS entries to be included in one challan. If you also need to deposit TCS, select the relevant TCS entry and enter that amount in the same way.
Step 7: Review tax, interest, fee and other amounts
Before proceeding, review the payment summary. The video says the final review page can include:
- Tax
- Interest
- Late fee
- Penalty
- Other amounts
The video refers to a late fee under Section 427, generally calculated at ₹200 per day for a delay in filing a statement. The Income Tax Department’s published material describes Section 427 as a fee for default in furnishing statements, calculated at ₹200 for each day of continuing failure and subject to the prescribed limit. Check whether the fee applies to your case and confirm the amount before paying. incometax.gov.in
Step 8: Verify the summary and complete payment
Before selecting Proceed with Payment, check:
- The correct Act and tax year are selected.
- The deductee type and residential status are accurate.
- Each payment entry has the appropriate provision reference.
- The tax amounts are correct.
- Any interest, late fee, penalty or other amount has been reviewed.
Then proceed with the available payment option and complete the transaction. After payment, use the portal’s payment history to check the status and view the payment details. Income Tax Department
Common mistakes to avoid
A few checks can help prevent avoidable challan or return issues:
- Selecting the wrong Act: Use the Income Tax Act, 2025 for payments relating to Tax Year 2026–27 onward; use the 1961 Act for the earlier periods specified by the portal.
- Using an old section number for a new-period transaction: Use the applicable table item under the new Act.
- Choosing the wrong deductee category or residential status: These details affect the options presented.
- Entering an incorrect tax amount: Check each entry before adding it.
- Skipping the final review: Confirm the combined totals and any additional amounts before proceeding.
- Paying late: Delayed filing or payment may increase compliance costs, so check applicable due dates and fees.
Keep the transaction date in view
The Act that applies to TDS depends on when the earlier of credit or payment occurs. The Income Tax Department says that if this event falls on or before 31 March 2026, the Income Tax Act, 1961 applies; if it falls on or after 1 April 2026, the Income Tax Act, 2025 applies. The date you deposit the TDS does not necessarily determine which Act governs the underlying deduction. Income Tax Department
Conclusion
The new e-Pay Tax flow brings the Act selection, Tax Year selection, payment entries and final review into a step-by-step process. The key is to match the challan to the correct period, deductee details and provision reference, then verify every amount before payment. As the new references differ from familiar section numbers, check the portal’s applicable entry for the specific transaction rather than relying on memory alone.
For a practical walkthrough, watch the video above.
