2026-27 TDS/TCS Section Codes: Full Updated List

The Income-tax Act, 2025 has introduced new section numbers and corresponding TDS/TCS codes. These revised section codes are applicable for Tax Year 2026-27 onwards and must be used while filing TDS/TCS returns under the new law.

To ensure accurate return filing, deductors and collectors should refer to the updated TDS/TCS section codes provided below.

TDS Section Codes for Tax Year 2026-27

The following table contains the revised TDS section codes prescribed under the Income-tax Act, 2025. These codes are applicable while filing TDS returns for Tax Year 2026-27 onwards.

Nature of Payment Relevant Section Section Code for TDS Return
Salary paid to State Government or other Government employees (excluding Union Government employees) 392 1001
Salary paid to employees other than Government employees 392 1002
Salary paid to Union Government employees (applicable for statements from FY 2013-14 onwards) 392 1003
Tax deduction in the case of specified senior citizens (applicable from FY 2021-22 onwards) 393(1) [Table: Sl. No. 8(iii)] 1032
Payment of accumulated balance due to an employee 392(7) 1004
Insurance commission or brokerage 393(1) [Table: Sl. No. 1(i)] 1005
Commission or brokerage (other than insurance) 393(1) [Table: Sl. No. 1(ii)] 1006
Rent for plant, machinery, or equipment paid to a specified person 393(1) [Table: Sl. No. 2(ii).D(a)] 1008
Rent for land, building, furniture, or fittings paid to a specified person 393(1) [Table: Sl. No. 2(ii).D(b)] 1009
Payment of consideration (other than consideration in kind) under an agreement referred to in Section 67(14) 393(1) [Table: Sl. No. 3(ii)] 1011
Compensation paid for acquisition of certain immovable property 393(1) [Table: Sl. No. 3(iii)] 1012
Income payable to a resident from units of a specified mutual fund, specified undertaking, or specified company 393(1) [Table: Sl. No. 4(i)] 1013
Interest income distributed by a business trust to a resident unit holder 393(1) [Table: Sl. No. 4(ii)] 1014
Dividend income distributed by a business trust to a resident unit holder 393(1) [Table: Sl. No. 4(ii)] 1015
Income (excluding the exempt portion under Schedule V) from units of an investment fund payable to a unit holder 393(1) [Table: Sl. No. 4(iii)] 1017
Income payable to an investor from an investment in a securitisation trust referred to in Section 221 393(1) [Table: Sl. No. 4(iv)] 1018
Interest income arising from securities 393(1) [Table: Sl. No. 5(i)] 1019
Interest income (other than interest on securities) payable to a senior citizen 393(1) [Table: Sl. No. 5(ii).D(a)] 1020
Interest income (other than interest on securities) payable to a person other than a senior citizen 393(1) [Table: Sl. No. 5(ii).D(b)] 1021
Interest income other than interest on securities 393(1) [Table: Sl. No. 5(iii)] 1022
Payment under a contract for carrying out any work, including labour supply, where the contractor is an Individual or HUF 393(1) [Table: Sl. No. 6(i).D(a)] 1023
Payment under a contract for carrying out any work, including labour supply, where the contractor is a person other than an Individual or HUF 393(1) [Table: Sl. No. 6(i).D(b)] 1024
Fees for technical services (excluding professional services), royalty relating to cinematographic films, or payments to call centre operators 393(1) [Table: Sl. No. 6(iii).D(a)] 1026
Fees for professional services or payments covered under Section 26(2)(h) 393(1) [Table: Sl. No. 6(iii).D(b)] 1027
Director’s remuneration, commission, fees, or similar payments (other than salary covered under Section 392) 393(1) [Table: Sl. No. 6(iii).D(b)] 1028
Dividend payments, including dividends on preference shares 393(1) [Table: Sl. No. 7] 1029
Amount received under a life insurance policy, including bonus, excluding amounts exempt under Schedule II 393(1) [Table: Sl. No. 8(i)] 1030
Payment made towards the purchase of goods 393(1) [Table: Sl. No. 8(ii)] 1031
Benefit or perquisite arising from business or profession provided to a resident 393(1) [Table: Sl. No. 8(iv)] 1033
Business or professional benefits/perquisites provided wholly or partly in kind where tax is deposited before release 393(1) [Table: Sl. No. 8(iv)] Note 6 1034
Sale of goods or services through an e-commerce operator’s digital platform 393(1) [Table: Sl. No. 8(v)] 1035
Consideration for transfer of a Virtual Digital Asset (VDA) where the transferor is not an Individual or HUF 393(1) [Table: Sl. No. 8(vi)] 1037
Consideration, whether in cash, kind, or both, for transfer of a Virtual Digital Asset 393(1) [Table: Sl. No. 8(vi)] Note 6 1038
Winnings from lotteries, crossword puzzles, card games, gambling, betting, or similar games (excluding online games) 393(3) [Table: Sl. No. 1] 1058
Winnings from lotteries, betting, gambling, crossword puzzles, card games, etc., where winnings are wholly/partly in kind and tax is paid before release 393(3) [Table: Sl. No. 1] Note 2 1059
Income from winnings in online games 393(3) [Table: Sl. No. 2] 1060
Online game winnings paid in kind or partly in kind where tax is deposited before release 393(3) [Table: Sl. No. 2] Note 2 1061
Income from horse race winnings 393(3) [Table: Sl. No. 3] 1062
Commission, remuneration, or prize paid to persons engaged in stocking, distributing, purchasing, or selling lottery tickets 393(3) [Table: Sl. No. 4] 1063
Cash payments by a bank, post office, or co-operative society to a co-operative society 393(3) [Table: Sl. No. 5.D(a)] 1064
Cash payments by a bank, post office, or co-operative society to persons other than co-operative societies 393(3) [Table: Sl. No. 5.D(b)] 1065
Amount referred to under Section 80CCA(2)(a) of the Income-tax Act, 1961 393(3) [Table: Sl. No. 6] 1066
Salary, remuneration, commission, bonus, or interest paid or credited to a partner of a firm, including the capital account 393(3) [Table: Sl. No. 7] 1067

Payment of accumulated balance payable to an employee 392(7) 1004
Income covered under Section 211 393(2) [Table: Sl. No. 1] 1039
Interest payable on foreign currency borrowings from outside India under eligible loan agreements or long-term infrastructure bonds issued between 1 July 2012 and 30 June 2023, or approved long-term bonds issued between 1 October 2014 and 30 June 2023 393(2) [Table: Sl. No. 2] 1040
Interest payable on funds borrowed from outside India through rupee-denominated bonds issued before 1 July 2023 393(2) [Table: Sl. No. 3] 1041
Interest on long-term bonds or rupee-denominated bonds issued between 1 April 2020 and 30 June 2023 and listed exclusively on a recognised stock exchange in an International Financial Services Centre (IFSC) 393(2) [Table: Sl. No. 4.E(a)] 1042
Interest on long-term bonds or rupee-denominated bonds issued on or after 1 July 2023 and listed exclusively on a recognised stock exchange in an IFSC 393(2) [Table: Sl. No. 4.E(b)] 1043
Interest income payable to a non-resident from an Infrastructure Debt Fund 393(2) [Table: Sl. No. 5] 1044
Distributed income referred to in Section 223 falling under Schedule V [Table: Sl. No. 3.B(a)] 393(2) [Table: Sl. No. 6.E(a)] 1045
Distributed income referred to in Section 223 falling under Schedule V [Table: Sl. No. 3.B(b)] 393(2) [Table: Sl. No. 6.E(b)] 1046
Distributed income referred to in Section 223 covered under Schedule V [Table: Sl. No. 4] 393(2) [Table: Sl. No. 7] 1047
Income from units of an investment fund specified under Section 224, excluding the exempt portion under Schedule V 393(2) [Table: Sl. No. 8] 1048
Income arising from investments in a securitisation trust specified under Section 221 393(2) [Table: Sl. No. 9] 1049
Income from units of a specified Mutual Fund under Schedule VII or from a specified company 393(2) [Table: Sl. No. 10] 1050
Income from units referred to in Section 208 393(2) [Table: Sl. No. 11] 1051
Long-term capital gains from transfer of units referred to in Section 208 393(2) [Table: Sl. No. 12] 1052
Interest or dividend income from bonds or Global Depository Receipts covered under Section 209 393(2) [Table: Sl. No. 13] 1053
Long-term capital gains arising from transfer of bonds or Global Depository Receipts referred to in Section 209 393(2) [Table: Sl. No. 14] 1054
Income from securities covered under Section 210(1) [Table: Sl. No. 1] 393(2) [Table: Sl. No. 15] 1055
Income from securities covered under Section 210(1) [Table: Sl. No. 1] (other applicable category) 393(2) [Table: Sl. No. 16] 1056
Interest (other than that covered under Codes 1040 to 1044) or any other taxable payment not chargeable under the head “Salaries” 393(2) [Table: Sl. No. 17] 1057
Winnings from lotteries, crossword puzzles, card games, gambling, betting, or similar games (excluding online games) 393(3) [Table: Sl. No. 1] 1058
Winnings from lotteries, betting, gambling, crossword puzzles, or similar games where winnings are wholly or partly in kind and tax has been deposited before release 393(3) [Table: Sl. No. 1] Note 2 1059
Income from online game winnings 393(3) [Table: Sl. No. 2] 1060
Online game winnings paid wholly or partly in kind where tax is paid before release 393(3) [Table: Sl. No. 2] Note 2 1061
Income from horse race winnings 393(3) [Table: Sl. No. 3] 1062
Commission, remuneration, or prize paid to persons engaged in the stocking, distribution, purchase, or sale of lottery tickets 393(3) [Table: Sl. No. 4] 1063
Cash payments by a bank, post office, or co-operative society to a co-operative society 393(3) [Table: Sl. No. 5.D(a)] 1064
Cash payments by a bank, post office, or co-operative society to persons other than co-operative societies 393(3) [Table: Sl. No. 5.D(b)] 1065
Amount covered under Section 80CCA(2)(a) of the Income-tax Act, 1961 393(3) [Table: Sl. No. 6] 1066
Salary, remuneration, commission, bonus, or interest paid or credited to a partner of a firm, including amounts credited to the capital account

TDS Section Codes for Tax Year 2026-27

Nature of Payment / Transaction Relevant Section Section Code for TDS Return
Sale of alcoholic liquor meant for human consumption 394(1) [Table: Sl. No. 1] 1068
Sale of tendu leaves 394(1) [Table: Sl. No. 2] 1069
Sale of timber obtained under a forest lease arrangement 394(1) [Table: Sl. No. 3] 1070
Sale of timber obtained through any mode other than a forest lease 394(1) [Table: Sl. No. 3] 1071
Sale of forest produce (other than timber and tendu leaves) obtained under a forest lease 394(1) [Table: Sl. No. 3] 1072
Sale proceeds from scrap 394(1) [Table: Sl. No. 4] 1073
Sale of minerals such as coal, lignite, or iron ore 394(1) [Table: Sl. No. 5] 1074
Sale of a motor vehicle where the sale value exceeds the prescribed threshold 394(1) [Table: Sl. No. 6.D(a)] 1075
Sale of a wristwatch above the specified monetary limit 394(1) [Table: Sl. No. 6.D(b)] 1076
Sale of artworks such as paintings, sculptures, or antiques exceeding the threshold 394(1) [Table: Sl. No. 6.D(b)] 1077
Sale of collectible items such as coins or stamps above the prescribed limit 394(1) [Table: Sl. No. 6.D(b)] 1078
Sale of yachts, rowing boats, canoes, or helicopters exceeding the threshold value 394(1) [Table: Sl. No. 6.D(b)] 1079
Sale of sunglasses where the consideration exceeds the specified limit 394(1) [Table: Sl. No. 6.D(b)] 1080
Sale of handbags, purses, or similar bags above the threshold limit 394(1) [Table: Sl. No. 6.D(b)] 1081
Sale of shoes where the sale consideration exceeds the prescribed limit 394(1) [Table: Sl. No. 6.D(b)] 1082
Sale of sportswear or sports equipment, including golf kits and ski-wear, above the threshold 394(1) [Table: Sl. No. 6.D(b)] 1083
Sale of a home theatre system exceeding the specified value 394(1) [Table: Sl. No. 6.D(b)] 1084
Sale of horses used for horse racing or polo where the consideration exceeds the threshold 394(1) [Table: Sl. No. 6.D(b)] 1085
Remittance under the Liberalised Remittance Scheme (LRS) for education or medical treatment exceeding the prescribed threshold 394(1) [Table: Sl. No. 7.D(a)] 1086
Remittance under the Liberalised Remittance Scheme (LRS) for purposes other than education or medical treatment exceeding the threshold 394(1) [Table: Sl. No. 7.D(b)] 1087
Sale of an overseas tour programme package, including travel, hotel, boarding, lodging, or related expenses, up to the prescribed threshold 394(1) [Table: Sl. No. 8.D(a)] 1088
Sale of an overseas tour programme package, including travel, hotel, boarding, lodging, or related expenses, exceeding the prescribed threshold 394(1) [Table: Sl. No. 8.D(b)] 1089
Use of a parking facility for business purposes, excluding mining or quarrying of mineral oil (including petroleum and natural gas) 394(1) [Table: Sl. No. 9] 1090
Use of a toll plaza for business purposes, excluding mining or quarrying of mineral oil (including petroleum and natural gas) 394(1) [Table: Sl. No. 9] 1091
Use of a mine or quarry for business purposes, other than mining or quarrying of mineral oil (including petroleum and natural gas) 394(1) [Table: Sl. No. 9] 1092
393(3) [Table: Sl. No. 7] 1067
Understanding GST Advisory 2026: Ship-to Field Requirement & Voluntary E-Way Bill Closure FAQs

Several questions, concerns and representations have been received from taxpayers, trade bodies, GST Suvidha Providers (GSPs) and other stakeholders regarding the mandatory reporting of the Ship-to field while generating E-Way Bills, as well as the facility for voluntary closure of E-Way Bills.

After examining these issues, a detailed set of Frequently Asked Questions (FAQs) has been prepared to address the common queries and provide clarity on the applicable system validations, compliance procedures and operational requirements.

All stakeholders are encouraged to review these FAQs carefully to understand the prescribed requirements, system checks and the process to be followed for proper compliance.

2026 GST Update: Changes to Aggregate Annual Turnover (AATO) Amendment Process

The Goods and Services Tax Network (GSTN) has released a new advisory on 1 July 2026 announcing a revised schedule for amending the Aggregate Annual Turnover (AATO) on the GST Portal.

This update is important for all GST-registered taxpayers, as the period for requesting AATO amendments for FY 2025-26 has been moved from May to July. The revision is part of a major enhancement to the GST system, enabling the portal to automatically recalculate and update the Aggregate Annual Turnover whenever subsequent GST returns are filed.

In this article, we discuss the meaning of AATO, the reason behind the revised amendment schedule, the updated timeline, and the key actions taxpayers should take before filing an amendment request.

GSTN Updates Timeline for AATO Amendment

The Goods and Services Tax Network (GSTN) has announced a revision in the schedule for amending the Aggregate Annual Turnover (AATO) on the GST Portal. The change is part of a major system upgrade aimed at improving the accuracy of turnover information available to taxpayers.

Previously, taxpayers were allowed to submit AATO amendment requests during the month of May each year. Beginning with FY 2025-26, this schedule has been revised.

Under the new process, taxpayers can submit AATO amendment requests from 1 July 2026 to 31 July 2026.

The revised timeline coincides with the launch of an enhanced GSTN system that will automatically recalculate and update a taxpayer’s Aggregate Annual Turnover whenever pending or future GST returns are filed, reducing the need for manual corrections.

What is Aggregate Annual Turnover (AATO)?

Aggregate Annual Turnover (AATO) represents the total value of a taxpayer’s supplies across India based on a single PAN during a financial year.

Generally, AATO includes:

  • Taxable outward supplies
  • Exempt supplies
  • Export supplies
  • Inter-State supplies

However, the following are excluded from AATO:

  • GST collected on outward supplies
  • Inward supplies that are liable to Reverse Charge

The AATO displayed on the GST Portal plays a vital role in determining several compliance requirements, including:

  • Eligibility under the QRMP Scheme
  • Applicability of e-Invoicing
  • E-Way Bill compliance
  • GST return filing obligations
  • Other system-based validations under GST

Since several GST compliances depend on this figure, maintaining an accurate AATO is essential.

Reason Behind the Revised Amendment Schedule

GSTN has introduced this change as part of a system enhancement designed to automate the updating of Aggregate Annual Turnover.

Under the earlier mechanism, if taxpayers filed pending GST returns after the AATO had already been calculated, the turnover reflected on the portal could become outdated or inaccurate.

With the upgraded functionality:

  • Aggregate Annual Turnover will be refreshed automatically whenever pending or subsequent GST returns are filed.
  • The requirement for manual amendments will be considerably reduced.
  • Turnover figures will remain consistent across different GST modules.
  • System validations will rely on more accurate and updated turnover data.
  • Overall accuracy and efficiency of the GST Portal will improve.

As these enhancements are being implemented from 1 July 2026, the AATO amendment window has also been shifted accordingly.

Revised AATO Amendment Schedule for FY 2025-26

Activity Updated Timeline
Submission of AATO Amendment Request by Taxpayer 1 July 2026 to 31 July 2026
Verification by Jurisdictional Tax Officer 1 August 2026 to 15 August 2026

Earlier Process vs Revised Process

Particular Earlier Procedure Revised Procedure
Amendment Window During May 1 July to 31 July
Officer Verification After May 1 August to 15 August
Automatic AATO Update Not Available Available from 1 July 2026

This revision represents one of the most significant improvements made by GSTN to the AATO amendment process since the feature was introduced. By integrating automatic turnover updates with GST return filing, the new system is expected to reduce errors, improve data consistency, and simplify GST compliance for taxpayers.

Earlier GSTN Advisory Continues Until FY 2024-25

GSTN has stated that the latest advisory should be read along with its earlier notification issued on 2 May 2022, which introduced the facility for taxpayers to amend their Aggregate Annual Turnover (AATO) during the month of May each year.

The procedure prescribed under the 2022 advisory remained applicable up to FY 2024-25. However, starting from FY 2025-26, taxpayers will need to follow the newly revised amendment schedule announced by GSTN.

Who Should Review Their AATO?

All GST-registered taxpayers are advised to verify the Aggregate Annual Turnover displayed on the GST Portal, especially in the following situations:

  • GST returns were filed after the close of the financial year.
  • There was a delay in filing GSTR-1 or GSTR-3B.
  • The turnover figures were modified after the original filings.
  • The business turnover is close to a compliance threshold under GST.
  • The turnover shown on the GST Portal does not match the books of accounts.

Reviewing the AATO in such cases helps avoid compliance issues arising from incorrect turnover data.

Steps to Amend AATO on the GST Portal

Once the amendment facility becomes available, taxpayers can follow these steps:

  1. Sign in to the GST Portal.
  2. Open the Aggregate Annual Turnover (AATO) amendment option.
  3. Check the turnover value automatically generated by the system.
  4. Update the turnover amount if any correction is required.
  5. Submit the amendment request within the specified time period.

After submission, the amendment request will be forwarded to the concerned jurisdictional tax officer for verification and approval.

Key Points Taxpayers Should Keep in Mind

  • The AATO amendment window for FY 2025-26 will remain open only from 1 July 2026 to 31 July 2026.
  • Requests filed after the closing date may not be considered.
  • Jurisdictional tax officers will verify amendment applications between 1 August and 15 August 2026.
  • Taxpayers should carefully confirm the accuracy of the turnover before submitting any request.
  • Incorrect AATO details may affect eligibility under various GST provisions and compliance requirements.

Assistance for Technical Issues

If taxpayers encounter any technical difficulty while using the AATO amendment facility, GSTN has advised them to submit a grievance through the Self-Service Portal available on the GST Portal.

To ensure quicker resolution, the grievance should include complete information along with any relevant supporting documents or screenshots.

Significance of the Latest Advisory

While the advisory does not introduce any amendments to the GST law itself, it brings an important procedural change to the management of Aggregate Annual Turnover.

The introduction of automatic AATO updates is expected to minimize manual corrections, improve the accuracy of turnover data, and ensure that the figures displayed on the GST Portal remain synchronized with the latest GST return filings.

Taxpayers should therefore review their AATO during the revised amendment period and make any necessary corrections before 31 July 2026.

Frequently Asked Questions (FAQs)

Q1. What is the revised period for amending AATO for FY 2025-26?

Taxpayers can submit AATO amendment requests from 1 July 2026 to 31 July 2026.

Q2. Why has GSTN changed the amendment schedule?

The timeline has been revised because GSTN is introducing an upgraded system that automatically updates Aggregate Annual Turnover whenever pending or future GST returns are filed.

Q3. When will amendment requests be verified by tax authorities?

Jurisdictional tax officers will examine and verify AATO amendment requests between 1 August 2026 and 15 August 2026.

Q4. Does the revised schedule apply to FY 2024-25?

No. The previous amendment window during May continues to apply up to FY 2024-25. The revised July timeline is effective from FY 2025-26 onwards.

Q5. Why is maintaining an accurate AATO important?

Aggregate Annual Turnover is used to determine eligibility for several GST compliance requirements, including the QRMP Scheme, e-Invoicing, E-Way Bill provisions, and various system-driven validations. Keeping the AATO accurate helps ensure smooth GST compliance.

New Post Office Savings Scheme Interest Rates from 1st July 2026

The Government of India has notified the interest rates for all Post Office Small Savings Schemes for the quarter 1 July 2026 to 30 September 2026. As anticipated, the Government has retained the existing rates without any revision. This marks the ninth consecutive quarter in which interest rates have remained unchanged.

The notified rates will continue to be applicable throughout July, August, and September 2026. The next review is expected before the commencement of the October–December 2026 quarter.

If you are considering investing in a Post Office savings scheme during this period, below are the latest interest rates along with the key highlights of each investment option.

Latest Post Office Small Savings Scheme Interest Rates (1 July 2026 – 30 September 2026)

Post Office Scheme Interest Rate (Per Annum)
Savings Account 4.00%
1-Year Time Deposit 6.90%
2-Year Time Deposit 7.00%
3-Year Time Deposit 7.10%
5-Year Time Deposit 7.50%
5-Year Recurring Deposit 6.70%
Monthly Income Scheme (MIS) 7.40%
National Savings Certificate (NSC) 7.70%
Public Provident Fund (PPF) 7.10%
Kisan Vikas Patra (KVP) 7.50%
Sukanya Samriddhi Yojana (SSY) 8.20%
Senior Citizens Savings Scheme (SCSS) 8.20%

Source: Ministry of Finance notification for the July–September 2026 quarter.

1. Post Office Savings Account – Interest Rate: 4.00%

The Post Office Savings Account offers features similar to a regular bank savings account. Account holders can deposit and withdraw funds as needed and receive facilities such as a passbook and ATM services, wherever available.

Interest Rate

4.00% per annum

Interest is calculated according to the rules applicable to Post Office savings accounts.

Key Highlights

  • Government-backed savings option.
  • High liquidity with easy deposits and withdrawals.
  • Suitable for individuals seeking a safe place to park short-term funds.

2. Post Office Time Deposit (Fixed Deposit)

The Post Office provides fixed deposit options with four different investment tenures.

Tenure Interest Rate
1 Year 6.90%
2 Years 7.00%
3 Years 7.10%
5 Years 7.50%

Interest is compounded every quarter and paid along with the maturity amount.

Key Highlights

  • Backed by the Government of India.
  • Assured returns over the chosen tenure.
  • Suitable for investors with a low-risk profile.
  • The 5-year Time Deposit qualifies for tax benefits under Section 80C, subject to the applicable provisions of the Income-tax Act.

3. Post Office Recurring Deposit (RD)

The Post Office Recurring Deposit Scheme is ideal for individuals who prefer building savings through regular monthly contributions.

Interest Rate

6.70% per annum

Key Highlights

  • Fixed monthly deposits.
  • Maturity period of five years.
  • Encourages disciplined and systematic savings.
  • Well suited for salaried employees and small investors.

4. Post Office Monthly Income Scheme (MIS)

The Monthly Income Scheme is a preferred investment choice for those looking to receive a steady monthly income while keeping their capital secure.

Interest Rate

7.40% per annum

Key Highlights

  • Monthly interest payment.
  • Five-year investment tenure.
  • Government-backed safety.

For instance, an investment of â‚ą1,00,000 earns annual interest of â‚ą7,400, resulting in a monthly income of approximately â‚ą617.

5. National Savings Certificate (NSC)

The National Savings Certificate is a popular long-term savings instrument that combines guaranteed returns with tax-saving benefits.

Interest Rate

7.70% per annum

Key Highlights

  • Five-year lock-in period.
  • Interest is compounded annually.
  • Entire accumulated amount is paid on maturity.
  • Eligible for deduction under Section 80C, subject to the applicable income tax provisions.

    6. Public Provident Fund (PPF)

    The Public Provident Fund (PPF) continues to be one of the most trusted long-term investment options for building wealth while enjoying tax benefits.

    Interest Rate

    7.10% per annum

    Key Features

    • Investment tenure of 15 years.
    • Minimum annual contribution of â‚ą500.
    • Maximum contribution allowed is â‚ą1.5 lakh in a financial year.
    • Interest earned is exempt from tax under the prevailing tax provisions.
    • The maturity amount is also tax-free, subject to the applicable laws.

    PPF is an excellent choice for investors seeking long-term, tax-efficient wealth creation with government-backed security.

    7. Kisan Vikas Patra (KVP)

    Although originally introduced for farmers, Kisan Vikas Patra (KVP) is open to all eligible investors.

    Interest Rate

    7.50% per annum

    Maturity Period

    The invested amount doubles in 115 months, equivalent to 9 years and 7 months.

    Key Features

    • Government-backed investment.
    • Assured returns on maturity.
    • Suitable for investors with medium- to long-term financial goals.

    8. Sukanya Samriddhi Yojana (SSY)

    The Sukanya Samriddhi Yojana continues to offer one of the highest interest rates among all Post Office Small Savings Schemes.

    Interest Rate

    8.20% per annum

    Key Features

    • Available for girl children below 10 years of age.
    • Minimum annual deposit of â‚ą250.
    • Maximum annual investment of â‚ą1.5 lakh.
    • Contributions can be made for 15 years.
    • The account matures after 21 years, subject to the scheme’s provisions.
    • Partial withdrawals are permitted for higher education, subject to prescribed conditions.

    SSY is a suitable investment option for parents and guardians planning for their daughter’s future education or marriage expenses.

    9. Senior Citizens Savings Scheme (SCSS)

    The Senior Citizens Savings Scheme (SCSS) remains one of the most attractive government-backed investment options for retirees seeking regular income.

    Interest Rate

    8.20% per annum

    Key Features

    • Available to eligible senior citizens.
    • Interest is paid every quarter.
    • Investment tenure of 5 years.
    • Extension after maturity is permitted in accordance with the scheme rules.
    • Maximum investment limit of â‚ą30 lakh.

    For retired individuals looking for stable and predictable returns, SCSS continues to be a preferred choice.

    Which Post Office Scheme Offers the Best Returns?

    For the July–September 2026 quarter, the leading schemes in different categories are:

    Category Recommended Scheme
    Highest Interest Rate Sukanya Samriddhi Yojana (8.20%)
    Best Option for Senior Citizens Senior Citizens Savings Scheme (8.20%)
    Ideal for Regular Monthly Income Monthly Income Scheme (7.40%)
    Best for Long-Term Tax-Free Savings Public Provident Fund (7.10%)
    Best for Guaranteed Wealth Accumulation National Savings Certificate (NSC) and Kisan Vikas Patra (KVP)
    Best for Monthly Savings Habit Post Office Recurring Deposit (RD)

    Interest Rates Remain Unchanged

    The Ministry of Finance has decided to retain the existing interest rates for all Post Office Small Savings Schemes for the July–September 2026 quarter.

    As a result, investors will continue to earn the same returns that were applicable during the previous quarter. These rates will remain in force until 30 September 2026, after which the Government will review and notify the interest rates for the October–December 2026 quarter.

    Conclusion

    Post Office Small Savings Schemes continue to be among the safest investment avenues in India due to their Government backing. Whether your objective is guaranteed returns, tax-efficient investing, retirement planning, regular monthly income, or long-term wealth creation, there is a suitable scheme to meet your financial needs.

    Before making an investment decision, compare factors such as investment tenure, liquidity, expected returns, and tax benefits to choose the scheme that best aligns with your financial goals and risk profile.

Latest Tax & Financial Changes from 1st July 2026 | Income Tax and GST Updates

With the commencement of July 2026, a number of significant regulatory and financial changes have become effective across India. These updates are expected to affect individual taxpayers, businesses, professionals, and the general public. Whether you are filing your Income Tax Return, managing GST compliance, dealing with TDS/TCS provisions, or using services related to Aadhaar, PAN, or passports, it is essential to stay informed about these latest developments.

1. Passport Fees Revised from 1 July 2026

One of the key changes effective from 1 July 2026 relates to passport services.

The Passport Seva system has introduced a revised fee structure for passport applications.

Some of the important revisions include:

  • The application fee for a fresh 36-page passport has increased from â‚ą1,500 to â‚ą2,500.
  • Charges for passport renewal, Tatkal applications, and replacement of lost or damaged passports have also been updated.

Individuals planning to apply for a new passport or renew an existing one should review the latest fee schedule before submitting their application.

2. Quarter-1 TDS and TCS Returns Due by 31 July 2026

With the completion of the first quarter of Tax Year 2026–27 (April to June 2026), the due date for filing quarterly TDS and TCS statements has arrived.

Due Date: 31 July 2026

Tax deductors and collectors are required to submit both TDS and TCS returns by this date. While returns may be filed earlier, 31 July 2026 is the final deadline for Quarter-1 compliance.

3. New TDS/TCS Return Forms and Updated Filing Utility

The Income Tax Department has introduced updated TDS/TCS return forms in line with the new Income-tax framework.

To facilitate return filing for Tax Year 2026–27 onwards, a new Return Preparation Utility (RPU) and Validation Utility have also been released.

Tax deductors should ensure they are using:

  • Latest RPU Version 1.0
  • Updated Validation Utility
  • Revised quarterly TDS/TCS return forms

Utilities applicable to FY 2025–26 should not be used for returns relating to Tax Year 2026–27. Businesses and professionals managing payroll or TDS compliance should update their software without delay.

4. Income Tax Return Filing Due Date for ITR-1 and ITR-2

July continues to be a crucial month for individual Income Tax Return filing.

For taxpayers filing ITR-1 and ITR-2, the due date remains:

31 July 2026

Before submitting the return, taxpayers should carefully verify the following information:

  • Annual Information Statement (AIS)
  • Form 26AS
  • Pre-filled return details
  • Bank account information

Checking these records on the Income Tax e-filing portal helps minimize errors and reduces the chances of receiving notices later.

5. Extended Due Date for ITR-3 and ITR-4 (Non-Audit Cases)

Business taxpayers have received additional time to file their Income Tax Returns.

For taxpayers filing ITR-3 or ITR-4 where a tax audit is not applicable, the due date has been extended to:

31 August 2026

This extension is particularly beneficial for taxpayers such as:

  • Futures & Options (F&O) traders
  • Intraday traders
  • Small business owners
  • Professionals

Considering the extended deadline, tax professionals may focus first on completing ITR-1 and ITR-2 filings during July.

6. Deadline Extended for Filing Appeals Before GSTAT

Taxpayers have also received relief regarding appeals before the GST Appellate Tribunal (GSTAT).

The deadline for filing appeals under Section 112 of the CGST Act has been extended to:

31 July 2026

The extension applies to eligible orders covered under the prescribed conditions, providing taxpayers with additional time to submit pending appeals before the Tribunal.

7. E-Way Bill Enhancements Postponed

GSTN had earlier announced two new features for the E-Way Bill system to improve reporting and compliance.

(a) E-Way Bill Closure Option

A new functionality will allow taxpayers to close an E-Way Bill after the transportation of goods is completed or if the movement does not take place.

(b) Mandatory “Ship To GSTIN”

For Bill-to Ship-to transactions, entering the GSTIN of the actual recipient (Ship To party) will become mandatory wherever applicable.

These enhancements have not yet been implemented. Their rollout has been postponed and is now expected to take effect from 1 August 2026. Until then, taxpayers need not be concerned if these options are unavailable on the E-Way Bill portal.

8. Updated TDS Return Forms Available on the Income Tax Portal

The Income Tax Department has enabled the revised quarterly TDS return forms for Tax Year 2026–27 on the e-filing portal.

Forms introduced under the updated Income-tax framework—including Forms 138, 140, 143, and 144, wherever applicable—are now available for filing.

As the new law has introduced revised section references and reporting codes, taxpayers and deductors should ensure that returns are prepared using the latest prescribed forms and utilities.

9. GST Quarterly Compliance Schedule Begins

With the April–June quarter now completed, several important GST return filings become due during July.

Key due dates include:

GSTR-3B

  • Monthly taxpayers – 20 July
  • QRMP taxpayers – 22 July or 24 July, depending on the State

GSTR-1

  • Monthly filers – 11 July
  • Quarterly filers – 13 July

Other GST returns due during the month include:

  • GSTR-5
  • GSTR-6
  • GSTR-7
  • GSTR-8

Taxpayers are also advised to reconcile purchase data through the Invoice Management System (IMS) Dashboard, which helps match invoices with GSTR-2B and improves the accuracy of GST reporting.

10. Aadhaar Email ID Update Now Free Through the Mobile App

UIDAI has introduced a welcome concession for Aadhaar users.

From 1 July 2026, updating an email ID through the Aadhaar Mobile App is free of cost.

Previously, a fee of â‚ą75 was charged for this service.

The waiver will remain available for six months. However, it applies only to updates made through the mobile application and not through the online portal.

11. PAN Application Procedure Revised

The process for applying for a Permanent Account Number (PAN) has also been updated under the revised Income-tax framework.

Applicants should keep the following changes in mind:

  • Aadhaar alone may not satisfy all identity or verification requirements.
  • Where proof of date of birth is required, documents such as a Matriculation Certificate or any other approved document may need to be submitted.
  • Applications should be filed using the revised PAN forms notified under the new Income-tax provisions.

Anyone planning to obtain a new PAN should carefully review the latest documentation requirements before submitting the application.

Quick Overview

Update Applicable Date
Passport application fees revised 1 July 2026
Quarter-1 TDS/TCS return due date 31 July 2026
New TDS/TCS forms and filing utilities Now Available
ITR-1 & ITR-2 filing due date 31 July 2026
ITR-3 & ITR-4 (Non-Audit) due date 31 August 2026
GSTAT appeal filing deadline 31 July 2026
New E-Way Bill features Expected from 1 August 2026
GST quarterly return filings July 2026
Aadhaar email update through App Free from 1 July 2026
Revised PAN application process Currently Effective

Conclusion

July 2026 is a crucial month for tax and regulatory compliance. A number of significant changes—including revised passport fees, updated TDS/TCS return procedures, Income Tax Return deadlines, GSTAT appeal relief, GST filing obligations, Aadhaar service updates, and changes to the PAN application process—have come into effect or are scheduled for implementation.

Whether you are an individual taxpayer, business owner, GST-registered entity, accountant, or tax professional, staying informed about these developments is essential. Timely compliance with the latest rules can help you avoid interest, penalties, and unnecessary notices while ensuring that you benefit from the relief measures and new facilities introduced from 1 July 2026.

Understanding Tax Audit Limits in 2026: â‚ą50 Lakh, â‚ą75 Lakh, â‚ą1 Crore, â‚ą2 Crore, â‚ą3 Crore and â‚ą10 Crore

One of the most frequently asked questions by business owners, professionals, Chartered Accountants, tax consultants and students is whether a Tax Audit is mandatory in a particular situation.

Many taxpayers assume the answer is straightforward. A common belief is that crossing a turnover of â‚ą1 crore automatically triggers a Tax Audit. Others are aware of the enhanced threshold of â‚ą10 crore and believe that no audit is required until turnover exceeds that amount. Similarly, taxpayers opting for presumptive taxation under Sections 44AD or 44ADA often presume that Tax Audit provisions never apply to them.

In reality, the legal provisions are far more nuanced.

The requirement of Tax Audit under Section 44AB is determined by several factors, such as the nature of the taxpayer’s activity, total turnover or gross receipts, the extent of cash transactions, eligibility for presumptive taxation schemes and the level of income disclosed.

Consequently, two businesses with identical turnover may have different Tax Audit obligations depending on their facts and circumstances. Likewise, a professional with gross receipts of â‚ą60 lakh may be governed by different provisions than a business entity having turnover running into several crores.

The introduction of the enhanced turnover limit of â‚ą10 crore for eligible businesses, along with the increased presumptive taxation limits of â‚ą3 crore under Section 44AD and â‚ą75 lakh under Section 44ADA, has added to the confusion. Many taxpayers mistakenly treat these limits as interchangeable, even though each provision operates independently and serves a different legislative purpose.

This article provides a practical and detailed explanation of the Tax Audit provisions contained in Section 44AB. It covers the audit requirements for businesses as well as professionals, explains the implications of presumptive taxation schemes under Sections 44AD, 44ADA and 44AE, discusses the benefit of higher turnover limits for businesses with predominantly digital transactions and illustrates the provisions through practical examples to help determine when a Tax Audit is compulsory.

After reading this article, you should be able to assess the applicability of Tax Audit across most real-life scenarios with confidence.

Purpose of Tax Audit

Tax Audit under Section 44AB is much more than a statutory compliance formality. Its primary objective is to ensure that taxpayers maintain proper books of account, compute taxable income accurately and comply with the provisions of the Income-tax Act.

As part of the audit, a Chartered Accountant verifies the books of account and furnishes the prescribed audit report containing the required particulars to the Income Tax Department.

This process promotes transparency in financial reporting, enhances tax compliance and minimizes errors in the reporting of taxable income.

It is important to note, however, that Tax Audit is not compulsory for every taxpayer. The Income-tax Act prescribes specific turnover limits and qualifying conditions that determine whether an audit is required.

Therefore, before considering the applicable turnover threshold, the first step is to identify the category into which the taxpayer falls.

Categories of Tax Audit Cases

For ease of understanding, Tax Audit cases can broadly be classified into the following categories:

Category Relevant Provision
Business under Normal Provisions Section 44AB
Profession under Normal Provisions Section 44AB
Presumptive Business Section 44AD
Presumptive Profession Section 44ADA
Business of Goods Carriages Section 44AE

Correctly identifying the applicable category is the foundation for determining whether Tax Audit is required. Once the relevant category is identified, the corresponding turnover limits and statutory conditions can be applied.

Tax Audit for Businesses

For taxpayers engaged in business, Section 44AB mandates a Tax Audit when the total sales, turnover or gross receipts exceed the prescribed limit during the relevant previous year.

Historically, the threshold for mandatory Tax Audit in the case of businesses has been â‚ą1 crore.

Accordingly, businesses whose turnover exceeds â‚ą1 crore are generally required to undergo a Tax Audit.

To encourage digital transactions and discourage cash-based dealings, the Government subsequently introduced a significant relaxation by increasing this threshold from â‚ą1 crore to â‚ą10 crore for eligible businesses.

However, this enhanced limit is available only when the prescribed conditions are satisfied:

Conditions for Availing the â‚ą10 Crore Tax Audit Threshold

The enhanced Tax Audit limit of â‚ą10 crore is available only when both of the following conditions are fulfilled:

  • Total cash receipts during the year do not exceed 5% of the aggregate receipts; and
  • Total cash payments during the year do not exceed 5% of the aggregate payments.

These requirements operate cumulatively. In other words, both conditions must be satisfied together.

If even one of these conditions is not met, the benefit of the enhanced limit cannot be claimed. In such a case, the normal Tax Audit threshold of â‚ą1 crore will apply.

Illustration

Assume a trader records a turnover of â‚ą6 crore during FY 2025-26.

If cash receipts account for 2% of total receipts and cash payments represent 3% of total payments, both percentages remain within the prescribed 5% limit. Accordingly, the trader qualifies for the enhanced Tax Audit threshold of â‚ą10 crore.

Since the turnover of â‚ą6 crore is below â‚ą10 crore, Tax Audit will not be required.

Now consider another scenario where cash payments increase to 8% of the total payments. As one of the prescribed conditions is breached, the enhanced threshold becomes inapplicable.

The taxpayer must then apply the regular threshold of â‚ą1 crore. Since the turnover exceeds â‚ą1 crore, a Tax Audit becomes compulsory.

Presumptive Taxation for Businesses – Section 44AD

Section 44AD offers a simplified taxation scheme for eligible small businesses with the objective of reducing their compliance burden. Taxpayers opting for this scheme are generally relieved from maintaining detailed books of account and undergoing Tax Audit, subject to the prescribed conditions.

A common misconception is that choosing Section 44AD permanently exempts a taxpayer from Tax Audit. In reality, the applicability of Tax Audit depends upon various statutory conditions, making a careful examination necessary in every case.

The scheme is available only to Resident Individuals, Resident Hindu Undivided Families (HUFs) and Resident Partnership Firms. Limited Liability Partnerships (LLPs) are specifically excluded. Likewise, businesses engaged in commission, brokerage, agency activities or certain notified businesses cannot opt for this scheme.

Before examining the Tax Audit implications, it is important to understand the turnover limits prescribed under Section 44AD.

Ordinarily, the scheme can be adopted where business turnover or gross receipts do not exceed â‚ą2 crore during the financial year. However, to promote digital transactions, the Government has increased this limit to â‚ą3 crore for eligible businesses.

The enhanced threshold of â‚ą3 crore is available only if cash receipts during the year do not exceed 5% of the total turnover or gross receipts.

It is essential to distinguish between the â‚ą3 crore limit under Section 44AD and the â‚ą10 crore limit under Section 44AB. The former determines whether a taxpayer can opt for presumptive taxation, whereas the latter determines the applicability of Tax Audit for businesses. Since both limits serve different legal purposes, they should not be confused.

Illustration

Suppose Mr. Aman operates a trading business and records turnover of â‚ą2.75 crore during FY 2025-26.

If only 2% of his turnover is received in cash, he qualifies for the enhanced â‚ą3 crore threshold and may opt for Section 44AD.

However, if cash receipts constitute 12% of the turnover, the enhanced limit becomes unavailable. Consequently, the standard threshold of â‚ą2 crore will apply, making him ineligible to opt for Section 44AD.

Presumptive Income under Section 44AD

Where a taxpayer adopts Section 44AD, income is deemed to be:

Nature of Receipts Presumptive Income
Receipts through digital modes 6% of turnover
Cash receipts 8% of turnover

Taxpayers may voluntarily declare income higher than these prescribed percentages if their actual profits are greater.

The real issue arises when a taxpayer intends to declare profits below the presumptive rates.

Sections 44AD(4) and 44AD(5) provide that where the prescribed conditions are not fulfilled and income lower than the presumptive rate is declared, the taxpayer may become liable to maintain books of account and undergo Tax Audit, particularly if the total income exceeds the basic exemption limit.

Therefore, taxpayers should not assume that opting for Section 44AD automatically and permanently eliminates the requirement of Tax Audit. The provisions relating to lower income declaration and the lock-in conditions must always be carefully considered.

Presumptive Taxation for Professionals – Section 44ADA

Recognising the compliance challenges faced by professionals, the Income-tax Act provides a separate presumptive taxation scheme through Section 44ADA.

This scheme is available only to Resident Individuals and Resident Partnership Firms engaged in specified professions. LLPs are specifically excluded.

Eligible professions generally include legal practice, medicine, engineering, architecture, accountancy, technical consultancy and other notified professions.

Under the regular provisions, professionals are required to undergo a Tax Audit when their gross receipts exceed â‚ą50 lakh. Section 44ADA, however, provides a simplified alternative for eligible professionals.

Normally, the scheme can be opted for where gross professional receipts do not exceed â‚ą50 lakh. To encourage digital payments, this threshold has been increased to â‚ą75 lakh where cash receipts during the year do not exceed 5% of total receipts.

This enhancement has widened the scope of presumptive taxation for professionals.

Illustration

Consider a Chartered Accountant whose gross professional receipts amount to â‚ą70 lakh during FY 2025-26.

If only 3% of the receipts are received in cash, the enhanced threshold of â‚ą75 lakh becomes applicable, enabling the professional to opt for Section 44ADA.

However, where cash receipts exceed 5%, the benefit of the enhanced limit is lost and eligibility must be determined based on the normal threshold of â‚ą50 lakh.

Presumptive Income under Section 44ADA

Under Section 44ADA, 50% of the gross professional receipts are deemed to be taxable income.

For instance, if a professional earns gross receipts of â‚ą60 lakh, the presumptive income will ordinarily be â‚ą30 lakh.

The law presumes that the remaining 50% represents expenses incurred while carrying on the profession.

In some situations, however, a professional may believe that the actual income is lower than the deemed 50%.

Such lower income can certainly be declared. However, if the total income exceeds the basic exemption limit, the taxpayer may be required to maintain books of account and comply with Tax Audit provisions.

Accordingly, professionals proposing to declare income below the presumptive rate should first evaluate the resulting compliance obligations.

Presumptive Taxation for Goods Carriage Operators – Section 44AE

Section 44AE provides a separate presumptive taxation scheme for taxpayers engaged in the business of operating, hiring or leasing goods carriages.

The objective of this provision is to simplify tax compliance for small transport operators by relieving them from maintaining detailed books of account in specified cases.

The scheme is available only where the taxpayer owns not more than ten goods vehicles at any point during the relevant previous year.

Unlike Sections 44AD and 44ADA, where presumptive income is calculated as a percentage of turnover or receipts, Section 44AE prescribes fixed presumptive income based on the type and capacity of the vehicle.

Presumptive Income under Section 44AE

Type of Goods Vehicle Presumptive Income
Heavy Goods Vehicle â‚ą1,000 per ton of gross vehicle weight or unladen weight for every month or part thereof
Other Goods Vehicles â‚ą7,500 per vehicle for every month or part thereof

Illustration

Assume a transport operator owns five goods vehicles, all of which are classified as vehicles other than heavy goods vehicles, throughout the financial year.

The presumptive income under Section 44AE will be calculated as follows:

â‚ą7,500 Ă— 5 Vehicles Ă— 12 Months = â‚ą4,50,000

If the taxpayer accepts this presumptive income, compliance requirements remain comparatively simple, and detailed books of account are generally not required.

However, where the taxpayer wishes to declare income lower than the amount prescribed under Section 44AE, the provisions relating to maintenance of books of account and the applicability of Tax Audit must be examined carefully.

Comparison of Sections 44AB, 44AD, 44ADA and 44AE

The table below highlights the key differences among the principal Tax Audit and presumptive taxation provisions.

Particulars Section 44AB (Business) Section 44AD Section 44ADA Section 44AE
Applicable To Businesses Eligible Small Businesses Eligible Professionals Goods Carriage Businesses
Normal Threshold â‚ą1 Crore â‚ą2 Crore â‚ą50 Lakh Turnover not relevant
Enhanced Threshold â‚ą10 Crore â‚ą3 Crore â‚ą75 Lakh Not Applicable
5% Digital Transaction Condition Applicable Applicable Applicable Not Applicable
Basis of Presumptive Income Not Applicable 6% / 8% of Turnover 50% of Gross Receipts Fixed Amount per Vehicle
LLP Eligible Yes No No Yes
When Tax Audit May Apply Based on turnover and prescribed conditions Where income is declared below the prescribed 6%/8% rate and other conditions are satisfied Where income is declared below 50% and statutory conditions are fulfilled Where income lower than the prescribed presumptive amount is declared and applicable conditions are met

Common Errors While Determining Tax Audit Applicability

Taxpayers frequently make mistakes while analysing whether a Tax Audit is required.

One of the most common errors is treating the â‚ą3 crore limit under Section 44AD as if it were the same as the â‚ą10 crore Tax Audit threshold under Section 44AB. In reality, both limits apply for different purposes and cannot be used interchangeably.

Another misconception is that professionals can also claim the â‚ą10 crore threshold. This relaxation is available only to eligible businesses and has no application to professional assessees.

Many taxpayers also believe that once they opt for Section 44AD or Section 44ADA, they will never be required to undergo a Tax Audit. This assumption is incorrect because declaring income below the presumptive rate or failing to satisfy the statutory conditions may still result in audit requirements.

A further mistake is overlooking the importance of the 5% cash receipt and cash payment condition while claiming the benefit of enhanced thresholds.

These misunderstandings can ultimately lead to incorrect compliance and possible penal consequences.

Practical Approach to Determine Tax Audit Applicability

Whenever the applicability of Tax Audit is being examined, the following step-by-step process should be followed:

  1. Identify whether the taxpayer is carrying on a business or a profession.
  2. Check whether any presumptive taxation scheme is applicable.
  3. Determine the total turnover or gross receipts.
  4. Calculate the percentage of cash receipts and cash payments.
  5. Verify whether the enhanced threshold is available.
  6. Examine whether income is being declared below the prescribed presumptive rate.
  7. Check whether the total income exceeds the applicable basic exemption limit.
  8. Apply the relevant provisions of Section 44AB and related presumptive taxation provisions.

Following this structured approach enables taxpayers and professionals to determine Tax Audit applicability correctly in almost every practical situation.

Frequently Asked Questions (FAQs)

Is Tax Audit mandatory if business turnover is â‚ą5 crore?

Not necessarily. If both cash receipts and cash payments do not exceed 5% of the total receipts and payments respectively, the enhanced threshold of â‚ą10 crore may be available. In such a case, Tax Audit may not be required.

Can professionals claim the â‚ą10 crore Tax Audit threshold?

No. The enhanced limit of â‚ą10 crore is available only for eligible business assessees and does not extend to professionals.

What is the turnover limit under Section 44AD?

The standard eligibility limit is â‚ą2 crore. This can be increased to â‚ą3 crore where cash receipts during the year do not exceed 5% of the total turnover or gross receipts.

What is the gross receipt limit under Section 44ADA?

Normally, the limit is â‚ą50 lakh. However, it increases to â‚ą75 lakh if cash receipts are not more than 5% of the total gross receipts.

Are LLPs eligible to opt for Sections 44AD or 44ADA?

No. Limited Liability Partnerships are specifically excluded from both presumptive taxation schemes.

Does declaring lower income automatically make Tax Audit compulsory?

No. Declaring income below the presumptive rate alone does not automatically trigger Tax Audit. The other statutory conditions prescribed under the Income-tax Act must also be satisfied before an audit becomes mandatory.

Conclusion

The applicability of Tax Audit cannot be decided solely on the basis of turnover or gross receipts. A proper determination requires a detailed examination of the taxpayer’s business or professional activity, eligibility for presumptive taxation, applicable turnover limits, the percentage of cash transactions and the amount of income actually declared.

The enhanced thresholds of â‚ą10 crore for eligible businesses, â‚ą3 crore under Section 44AD and â‚ą75 lakh under Section 44ADA have significantly reduced compliance requirements for many taxpayers. At the same time, these provisions have also created confusion because each threshold serves a distinct legal purpose.

Accordingly, taxpayers and professionals should adopt a systematic approach while evaluating Tax Audit applicability. By first identifying the relevant statutory provision and then applying the prescribed conditions, even complex Tax Audit issues can be analysed accurately and resolved with confidence.
Income Tax Scrutiny Notices Under Section 143(2) Issued in June 2026: What Taxpayers Should Know

Why Are Taxpayers Receiving Section 143(2) Notices Across India?

In recent days, a large number of taxpayers have reported receiving notices under Section 143(2) of the Income-tax Act from the Income Tax Department.

For many, receiving any communication from the department immediately creates anxiety. Reports and discussions on social media have further fuelled concerns, with claims that scrutiny notices are being issued to a significant number of taxpayers.

This has left many wondering:

“I filed my Income Tax Return several months ago. Why have I received a notice only now?”

It is one of the most common questions taxpayers are asking.

The reason is linked to a specific statutory time limit prescribed under the Income-tax Act for issuing scrutiny notices—a provision that many taxpayers are unaware of.

Before assuming the worst, it is important to understand why these notices are being issued, what they actually mean, and whether you need to take any immediate action.

Why Are So Many Section 143(2) Notices Being Issued?

Many taxpayers are unaware that the Income Tax Department has a legally prescribed time limit for issuing scrutiny notices. Such notices cannot be sent at any time after a return is filed.

For Assessment Year (AY) 2025-26, the last date for issuing a notice under Section 143(2) is:

30 June 2026

This deadline plays a significant role in the recent increase in scrutiny notices.

If the Department decides to examine a return filed for AY 2025-26, the notice must be issued on or before this date. As the deadline approaches, the Department completes its risk assessment and selects eligible cases for detailed verification, resulting in a higher number of notices being issued during June 2026.

What Is a Notice Under Section 143(2)?

A notice under Section 143(2) is issued when the Income Tax Department chooses an Income Tax Return for a detailed review.

The purpose of the scrutiny is to verify whether:

  • Income has been reported correctly.
  • Deductions claimed are eligible.
  • Exemptions have been claimed as per law.
  • Capital gains have been computed accurately.
  • The information reported in the return matches the data available with the Department.

Receiving such a notice does not mean that the taxpayer has concealed income or committed tax evasion. It simply indicates that the Department requires additional information or supporting documents before completing the assessment.

Why Has Your Return Been Selected for Scrutiny?

Many taxpayers believe that once their return is processed, the matter is closed. However, the Income Tax Department now relies on advanced technology, including data analytics and AI-based risk assessment, to identify cases requiring further verification.

Information from multiple sources is compared before a return is selected for scrutiny.

1. Differences Between AIS, Form 26AS and ITR

One of the most common reasons for scrutiny is inconsistency between:

  • Annual Information Statement (AIS)
  • Form 26AS
  • Income Tax Return (ITR)

Even minor mismatches may trigger further examination.

2. High-Value Financial Transactions

The Department receives information relating to various significant transactions, such as:

  • Large cash deposits
  • Purchase or sale of immovable property
  • High-value investments
  • Significant credit card payments
  • Foreign remittances

If these transactions are not consistent with the income reported, the return may be selected for scrutiny.

3. Incorrect Reporting of Capital Gains

Taxpayers who have sold assets such as:

  • Land
  • Residential property
  • Commercial property
  • Shares
  • Mutual funds

may receive scrutiny notices if capital gains have not been disclosed or calculated correctly.

4. Large Refund Claims or Questionable Deductions

Returns claiming substantial tax refunds or unusually high deductions and exemptions are often subjected to additional verification before refunds are processed.

5. Business Losses or Unusual Profit Patterns

Businesses reporting:

  • Heavy losses
  • Exceptionally low profits
  • Large expense claims
  • Significant deductions

may attract closer examination by the Department.

6. Foreign Income and Overseas Assets

The Department has strengthened monitoring of taxpayers having:

  • Foreign bank accounts
  • Overseas investments
  • Foreign income
  • International financial transactions

Incomplete or incorrect reporting of such information may result in scrutiny.

Does a Section 143(2) Notice Mean You Have Violated Tax Laws?

No.

Receiving a scrutiny notice should not be interpreted as evidence of tax evasion or wrongdoing.

It simply means that the Income Tax Department wishes to verify certain details mentioned in your return.

Every year, many honest taxpayers receive scrutiny notices and complete the assessment successfully by submitting the required documents and explanations.

What Should You Do After Receiving a Notice?

Most scrutiny assessments are now conducted online through the Faceless Assessment system.

The general process includes:

Step 1: Log in to the Income Tax e-Filing Portal.

Step 2: Read the notice carefully along with any questionnaire issued.

Step 3: Gather all relevant documents and records.

Step 4: Upload your response through the e-Proceedings facility.

Step 5: Ensure that the response is submitted before the due date mentioned in the notice.

In most cases, the entire communication takes place electronically.

Documents That May Be Required

Depending on the issues involved, the Department may request documents such as:

  • Bank account statements
  • Property purchase agreements
  • Sale deeds
  • Capital gains calculations
  • Books of account
  • GST records
  • Loan confirmations
  • Investment proofs
  • Details of foreign assets
  • Income-related supporting documents

The exact list of documents varies according to the facts of each case.

Can You Ignore a Section 143(2) Notice?

No.

Ignoring a scrutiny notice can have serious consequences, including:

  • Best Judgment Assessment
  • Addition of income
  • Additional tax demand
  • Interest liability
  • Penalty proceedings

It is therefore essential to review the notice carefully and submit an appropriate response within the prescribed time.

Important Deadline

Particulars Details
Financial Year 2024-25
Assessment Year 2025-26
Last Date for Issue of Notice under Section 143(2) 30 June 2026

This statutory deadline is the primary reason for the noticeable increase in scrutiny notices during June 2026.

Key Takeaway

If you have received a notice under Section 143(2), there is no need to panic.

A scrutiny notice does not automatically indicate tax evasion or any irregularity. In many cases, it is issued simply because the Department requires additional verification before completing the assessment.

The recent surge in notices is mainly due to the statutory deadline of 30 June 2026 for issuing scrutiny notices for AY 2025-26.

Read the notice carefully, collect the necessary documents, respond accurately within the prescribed timeline, and seek professional assistance if required. Prompt compliance and proper documentation are the best way to ensure a smooth scrutiny process.

Frequently Asked Questions (FAQs)

Is a notice under Section 143(2) a cause for concern?

It should be taken seriously, but receiving the notice does not automatically mean that you have violated any tax provisions.

Why are many taxpayers receiving these notices in June 2026?

The Income Tax Department must issue scrutiny notices for AY 2025-26 on or before 30 June 2026, which explains the increase in notices during this period.

Are scrutiny assessments conducted online?

Yes. Most scrutiny proceedings are handled electronically through the Faceless Assessment system.

Can I appoint a Chartered Accountant to handle my case?

Yes. A Chartered Accountant or any authorised representative can assist you in preparing and submitting responses during the scrutiny proceedings.

What should I do immediately after receiving the notice?

Log in to the Income Tax e-Filing Portal, review the notice carefully, collect all relevant supporting documents, and submit your response within the specified deadline.

Income Tax Department Enables ITR-3 for AY 2026-27; ITR-1 to ITR-4 Ready for Filing

ITR-3 Now Available for AY 2026-27: Online Filing & Excel Utility Released

The Income Tax Department has officially activated both the Online Filing Facility and Excel Utility for ITR-3 for Assessment Year (AY) 2026-27. This marks a significant milestone for taxpayers who were waiting for the ITR-3 form to become available before submitting their Income Tax Returns.

Previously, the department had already enabled ITR-1, ITR-2, and ITR-4 in both online and offline modes. However, many taxpayers—including business owners, professionals, freelancers, traders, and individuals earning business or professional income—were unable to file their returns because ITR-3 had not yet been released.

With ITR-3 now available, the majority of individual taxpayers can begin filing their Income Tax Returns for AY 2026-27 without any further delay.

Taxpayers can access the filing portal by visiting www.incometax.gov.in.

Extended Due Date for Certain ITR-3 Filers

Individuals filing ITR-3 who earn income from business or profession and are not required to get their accounts audited can file their Income Tax Return up to 31st August 2026.

Who Should File ITR-3?

ITR-3 is applicable to Individuals and Hindu Undivided Families (HUFs) having income from business or profession, including:

  • Proprietorship business
  • Professional practice
  • Freelancing services
  • Share trading and Futures & Options (F&O) transactions
  • Commission or brokerage income
  • Business income along with income from other sources

In general, taxpayers earning income under the head “Profits and Gains of Business or Profession” should file ITR-3, unless they choose the presumptive taxation scheme and qualify to file ITR-4.

Who Should File ITR-1?

ITR-1 (Sahaj) is meant for resident individuals who satisfy the prescribed conditions and generally have:

  • Income from salary or pension
  • Income from one house property
  • Income from other sources, such as interest
  • Total income within the prescribed eligibility limits

    Who Should File ITR-2?

    ITR-2 is meant for Individuals and Hindu Undivided Families (HUFs) who do not earn income from business or profession but have income from one or more of the following sources:

    • Capital gains arising from the sale of shares, mutual funds, or immovable property.
    • Income from more than one house property.
    • Ownership of foreign assets or receipt of foreign income.
    • Total income that exceeds the eligibility criteria prescribed for filing ITR-1.

      Who Should File ITR-3?

      ITR-3 is designed for Individuals and Hindu Undivided Families (HUFs) earning income from a business or profession. It is generally applicable to taxpayers such as:

      • Proprietors running a business.
      • Professionals, including doctors, lawyers, architects, and chartered accountants.
      • Consultants providing professional services.
      • Freelancers earning income from independent assignments.
      • Traders dealing in shares, Futures & Options (F&O), and other derivatives.
      • Individuals having business or professional income along with salary, capital gains, house property income, or income from other sources.

      Documents Required Before Filing Your Income Tax Return

      To ensure a smooth and accurate filing process, taxpayers should keep the following documents readily available:

      • PAN Card
      • Aadhaar Card
      • Form 16 (where applicable)
      • Form 26AS
      • Annual Information Statement (AIS)
      • Taxpayer Information Summary (TIS)
      • Bank account details
      • Capital gains statements
      • Interest certificates from banks and financial institutions
      • Business financial statements and books of accounts (where applicable)

      Verify AIS, TIS and Form 26AS Before Filing

      Before submitting the Income Tax Return, taxpayers should carefully reconcile the information available in:

      • Annual Information Statement (AIS)
      • Taxpayer Information Summary (TIS)
      • Form 26AS

      These records provide details of various financial transactions, including:

      • Interest income
      • Dividend income
      • Share market transactions
      • Mutual fund investments and redemptions
      • Sale or purchase of property
      • Tax Deducted at Source (TDS)
      • Specified high-value financial transactions

      Matching these details with the information reported in your return helps avoid discrepancies. Any inconsistency may lead to notices from the Income Tax Department, defective return processing, or additional compliance requirements.

      E-Verification is Compulsory

      Filing the Income Tax Return is only one part of the process. Taxpayers must also complete the e-verification of the return within the prescribed time limit.

      A return that is not e-verified within the specified period may be treated as invalid under the provisions of the Income-tax Act, resulting in the return being considered as not filed.

      ITR-3 Now Available Along with ITR-1, ITR-2 & ITR-4

      The launch of ITR-3 for AY 2026-27 has provided significant relief to business owners, professionals, freelancers, traders, and other taxpayers who were waiting for the form to become available before filing their Income Tax Returns.

      With ITR-1, ITR-2, ITR-3, and ITR-4 now enabled in both online and offline modes, the majority of taxpayers can move forward with filing their returns for the current assessment year.

      Before Filing

      • Review AIS (Annual Information Statement)

      • Verify TIS (Taxpayer Information Summary)

      • Reconcile details with Form 26AS

Mandatory “Ship To GSTIN” Entry and Voluntary E-Way Bill Closure Features Delayed by GSTN

Relief for Businesses: GSTN Provides Additional Time for System Preparedness

In a welcome move for taxpayers, transporters, GST Suvidha Providers (GSPs), ERP solution providers, and other stakeholders, the Goods and Services Tax Network (GSTN) has postponed the rollout of two key E-Way Bill enhancements that were originally scheduled to take effect from 15 June 2026.

According to the latest GSTN advisory released on 9 June 2026, the implementation of the following features has been rescheduled and will now come into force from 1 August 2026:

  • Mandatory reporting of “Ship To GSTIN” in Bill-To/Ship-To transactions.
  • Facility for Voluntary Closure of E-Way Bills.

Why Was the Implementation Deferred?

Earlier, through an advisory dated 20 May 2026, GSTN had announced that these functionalities would be introduced from 15 June 2026. Following the announcement, several industry bodies, businesses, ERP vendors, and other stakeholders highlighted the need for additional preparation time before the changes could be implemented smoothly.

The requests primarily cited the need for:

  • Upgrading and modifying existing software systems
  • API development, integration, and testing
  • Necessary changes in ERP applications
  • Correction and validation of master data
  • Training of users and operational teams
  • Ensuring overall system readiness

Taking these concerns into account, GSTN has extended the implementation timeline by around six weeks, providing stakeholders with sufficient time to complete the required technical and operational preparations before the new requirements become mandatory.

1. Mandatory Reporting of “Ship To GSTIN” in Bill-To/Ship-To Transactions

As part of the proposed enhancement to the E-Way Bill system, taxpayers involved in Bill-To/Ship-To transactions will be required to mention the GSTIN of the actual consignee (Ship-To party) while generating E-Way Bills.

This measure aims to:

  • Improve the quality and accuracy of transaction data
  • Minimize reporting discrepancies and mismatches
  • Create a stronger and more reliable audit trail
  • Increase transparency in the movement and delivery of goods

Businesses using accounting, billing, or ERP software should use the extended timeline to ensure that the necessary Ship-To GSTIN fields are incorporated and functioning correctly before the revised implementation date.

2. Introduction of Voluntary E-Way Bill Closure Facility

GSTN is also set to launch a new feature enabling taxpayers to voluntarily close an E-Way Bill in specified situations where the movement of goods does not take place or the E-Way Bill is no longer required.

The proposed facility is expected to offer several benefits, including:

  • Greater control over E-Way Bill management
  • Prevention of misuse of inactive or unused E-Way Bills
  • Better compliance tracking and monitoring
  • Improved reliability of logistics and transportation records

Further procedural instructions and operational guidelines are likely to be issued by GSTN before the feature becomes effective.

Revised Implementation Schedule

Particulars Earlier Effective Date Revised Effective Date
Mandatory reporting of Ship-To GSTIN in Bill-To/Ship-To transactions 15 June 2026 1 August 2026
Voluntary E-Way Bill Closure Facility 15 June 2026 1 August 2026

What Taxpayers Should Do Now

Taxpayers should make the most of the additional time provided by GSTN and undertake the following activities:

âś… Upgrade ERP, billing, and accounting applications

âś… Validate and test E-Way Bill API integrations

âś… Review and update customer and consignee GSTIN master data

âś… Conduct training sessions for GST, accounts, and logistics personnel

âś… Coordinate with GSPs, ERP providers, and software vendors

âś… Perform end-to-end testing to ensure readiness before 1 August 2026

Proper preparation during this extended period will help businesses achieve a smooth transition and avoid compliance issues once the new E-Way Bill requirements become operational.

Complete Guide to Selecting the Proper ITR Form for AY 2026-27

How to Select the Right ITR Form for AY 2026-27

The filing season for Income Tax Returns (ITR) for Assessment Year (AY) 2026-27 is now open. One of the most frequent errors made by taxpayers is choosing an inappropriate ITR form while filing their return. Using the wrong form may cause the return to be considered defective, resulting in notices from the Income Tax Department and additional compliance requirements.

To ensure smooth and accurate filing, taxpayers should understand the eligibility criteria for each ITR form. This article highlights the key changes introduced for AY 2026-27 and explains who can use ITR-1 (Sahaj).

Major Updates for AY 2026-27

Before filing your return, it is important to be aware of the following changes applicable for the current assessment year.

1. Reporting of Two House Properties Allowed in ITR-1 and ITR-4

The government has provided relief to small taxpayers by allowing eligible individuals filing ITR-1 (Sahaj) and ITR-4 (Sugam) to disclose income from up to two house properties, provided all other prescribed conditions are fulfilled.

2. Updated Return Filing Deadlines

The due dates for filing Income Tax Returns for AY 2026-27 are as follows:

Taxpayer CategoryDue Date
Individuals/HUFs not subject to audit and not having business or professional income 31 July 2026
Taxpayers having business or professional income but not liable for audit 31 August 2026
Taxpayers covered under tax audit provisions 31 October 2026

Filing within the prescribed timeline helps avoid interest, penalties, late filing fees, and other inconveniences.

ITR-1 (SAHAJ)

Eligibility for Filing ITR-1

A resident individual may file ITR-1 if he or she has:

  • Income from salary or pension.
  • Income from not more than two house properties.
  • Income from other sources such as savings bank interest, fixed deposit interest, family pension, etc.
  • Agricultural income not exceeding â‚ą5,000.
  • Total income up to â‚ą50 lakh.
  • Long-term capital gains under Section 112A up to â‚ą1,25,000.

Persons Not Eligible to File ITR-1

ITR-1 cannot be used by a taxpayer who:

  • Has total income exceeding â‚ą50 lakh.
  • Is a director in any company.
  • Owns unlisted equity shares.
  • Has capital gains income not covered under the prescribed conditions.
  • Earns income from business or profession.
  • Possesses foreign assets or receives foreign income.
  • Is a Non-Resident (NR) or Resident but Not Ordinarily Resident (RNOR).

Best Suited For

ITR-1 is generally suitable for:

  • Salaried individuals.
  • Retired pensioners.

    ITR-2

    Who is Eligible to File ITR-2?

    ITR-2 is meant for Individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession but earn income from one or more of the following sources:

    • Salary or pension.
    • Income from house property.
    • Capital gains arising from the sale of shares, mutual funds, immovable property, or other capital assets.
    • Foreign income or ownership of foreign assets.
    • Total income exceeding â‚ą50 lakh.
    • Holding the position of Director in a company.
    • Investment in unlisted equity shares.

    Who Should Use ITR-2?

    ITR-2 is generally suitable for:

    • Salaried individuals having capital gains transactions.
    • Taxpayers who have sold property, shares, mutual funds, or other capital assets during the financial year.
    • Non-Resident Indians (NRIs).
    • Individuals required to disclose foreign assets or foreign-source income in their Income Tax Return.
  • Taxpayers earning interest from bank deposits and other similar sources.

    ITR-3

    Who Can File ITR-3?

    ITR-3 is applicable to Individuals and Hindu Undivided Families (HUFs) who earn income from business or professional activities. This includes income from:

    • Proprietary business operations.
    • Professional services and practice.
    • Freelancing assignments.
    • Commission or brokerage earnings.
    • Futures and Options (F&O) trading.
    • Intraday stock trading.
    • Business or professional income along with income from salary, house property, capital gains, or other sources.

    Who Should Use ITR-3?

    ITR-3 is generally suitable for:

    • Chartered Accountants.
    • Doctors and medical practitioners.
    • Advocates and legal professionals.
    • Consultants and independent professionals.
    • Share and derivatives traders.
    • Freelancers.
    • Proprietors running their own business.

    ITR-4 (SUGAM)

    Who Can File ITR-4?

    ITR-4 is designed for Resident Individuals, HUFs, and Firms (excluding LLPs) who opt for the presumptive taxation scheme under:

    • Section 44AD – Presumptive taxation for eligible businesses.
    • Section 44ADA – Presumptive taxation for specified professionals.
    • Section 44AE – Presumptive taxation for goods carriage operators.

    Eligibility Conditions for ITR-4

    A taxpayer can file ITR-4 if:

    • Total income does not exceed â‚ą50 lakh.
    • Income is declared under the eligible presumptive taxation provisions.
    • Income is earned from up to two house properties.
    • Income includes interest and other permissible sources.
    • Long-Term Capital Gain (LTCG) under Section 112A does not exceed â‚ą1,25,000.

    Who Cannot File ITR-4?

    ITR-4 cannot be used by:

    • Taxpayers holding foreign assets or earning foreign income.
    • Directors in companies.
    • Limited Liability Partnerships (LLPs).

    Who Should Use ITR-4?

    ITR-4 is best suited for:

    • Small business owners opting for presumptive taxation.
    • Tax practitioners and consultants.
    • Professionals covered under Section 44ADA.
    • Retail traders and other eligible taxpayers under the presumptive taxation scheme.

      ITR-5

      Who Can File ITR-5?

      ITR-5 is applicable to various non-individual entities, including:

      • Partnership Firms.
      • Limited Liability Partnerships (LLPs).
      • Associations of Persons (AOPs).
      • Bodies of Individuals (BOIs).
      • Artificial Juridical Persons (AJPs).

      This return form is not meant for individual taxpayers.

      ITR-6

      Who Can File ITR-6?

      ITR-6 is required to be filed by companies that are not claiming exemption under Section 11 of the Income Tax Act.

      This form is commonly used by:

      • Private Limited Companies.
      • Public Limited Companies.
      • Other corporate entities not eligible for filing ITR-7.

      ITR-7

      Who Can File ITR-7?

      ITR-7 is prescribed for entities that are required to furnish returns under specific provisions of the Income Tax Act. These generally include:

      • Charitable Trusts.
      • Religious Trusts.
      • Political Parties.
      • Educational and Academic Institutions.
      • Research Associations and similar organizations.

      Consequences of Choosing the Wrong ITR Form

      Filing an incorrect ITR form can create unnecessary complications and may result in various issues such as:

      • Receipt of a defective return notice under Section 139(9).
      • Delay in processing of the Income Tax Return.
      • Delay in receiving income tax refunds.
      • Additional compliance and rectification requirements.
      • Necessity to file a revised return.

      Therefore, taxpayers should carefully assess all sources of income and verify their eligibility before selecting the applicable return form.

      Conclusion

      Selecting the correct ITR form is one of the most crucial steps in the return filing process. For AY 2026-27, taxpayers should take note of important updates, including the relaxation allowing eligible taxpayers to report income from up to two house properties and the revised return filing deadlines for different categories of taxpayers.

      Before filing the return, it is advisable to review all sources of income, including salary, house property, capital gains, business income, professional receipts, foreign assets, foreign income, and presumptive taxation income. Choosing the appropriate ITR form ensures accurate compliance with tax provisions and reduces the chances of notices, delays, and filing errors.

      A correctly filed Income Tax Return not only fulfills legal obligations but also facilitates quicker processing of returns and faster issuance of refunds.