TDS Consolidation — 60+ Sections to 3 Sections Migration Guide
Complete guide on TDS consolidation under the Income Tax Act. Covers both the current IT Act, 1961 (applicable until March 31, 2026) and the new IT Act, 2025 (effective April 1, 2026). Updated with all CBDT notifications and Finance Act amendments up to March 2026.
Framework: Income Tax Act, 1961 / Income Tax Act, 2025
Portal: incometax.gov.in
Updated: March 2026
Overview
TDS consolidation is an essential topic for every taxpayer in India — whether salaried, self-employed, business owner, or investor. Understanding the rules correctly helps optimize your tax liability legally while ensuring full compliance with filing requirements and deadlines.
Key Provisions
The Income Tax framework covers: (a) what income is taxable and at what rate, (b) what deductions and exemptions are available, (c) which forms to file and by when, (d) what TDS obligations exist, (e) what penalties apply for non-compliance. All filings on the e-filing portal (incometax.gov.in) with PAN/Aadhaar verification.
Practical Guidance
For salaried individuals: Collect Form 16 from employer, check 26AS/AIS for all income sources, choose between old and new regime, claim applicable deductions, file ITR-1 or ITR-2 by July 31.
For business persons: Maintain books (if not using presumptive), get tax audit if turnover exceeds threshold, pay advance tax quarterly, file ITR-3 or ITR-4 by July 31 or October 31.
For investors: Report all capital gains (property, shares, MF), claim exemptions (54, 54EC, 54F) where available, report foreign assets in Schedule FA. LTCG on listed equity taxed at 12.5% above Rs. 1.25 lakh.
IT Act 1961 vs 2025
The new IT Act 2025 takes effect from April 1, 2026. Key changes: Tax Year replaces AY/PY, TDS consolidated from 60+ to 3 sections, simplified language, digital-first compliance. Tax rates, deduction limits, and most exemptions remain the same — the reform is structural, not rate-based.
Penalties
| Default | Consequence | Section |
|---|---|---|
| Late filing | Rs. 5,000 penalty + 234A interest 1%/month | 234F/234A |
| Short advance tax | Interest 1%/month | 234B/234C |
| Under-reporting income | 50% penalty on tax of under-reported income | 270A |
| Misreporting income | 200% penalty | 270A |
| Tax evasion (> Rs. 25L) | Imprisonment 6 months-7 years | 276C |