CBDT Updates TDS/TCS Correction Timeline Under New Income Tax Act 2025; Sets 2-Year Deadline For Filing Return

The Central Board of Direct Taxes (CBDT) has issued a notification outlining revised timelines for filing correction statements under the newly enacted Income Tax Act, 2025. With the Income Tax Act, 1961 set to be repealed from April 1, 2026, stakeholders must now follow the new Income Tax Act, 2025-specifically Section 397(3)(f), which sets a two-year deadline for filing TDS and TCS correction statements.

CBDT Notifies Revised Timeline for TDS/TCS Corrections Under Income Tax Act, 2025

"Revised Timelines For Filing Correction Statements The Income Tax Act, 1961 Stands Repealed With Effect From 1st April 2026, By Virtue Of Section 536 Of The Income Tax Act, 2025," the official notification stated.

In View Of Section 397(3)(f) Of The Income Tax Act, 2025, Deductors/Collectors Are Permitted To File Correction Statements Within Two Years From The End Of The Tax Year In Which The Statement Is Required To be furnished. Deductors, Collectors, And Other Stakeholders Are Advised To Take Note Of the revised timeline," notification stated further.

Key Update: Two-Year Window for TDS/TCS Corrections

As per Section 397(3)(f) of the Income Tax Act, 2025, deductors and collectors are allowed a period of two years from the end of the relevant tax year in which the original TDS/TCS statement was required to be furnished, to file a correction statement. This replaces the previous provisions under the 1961 Act, streamlining the correction process and providing greater clarity and consistency to stakeholders.

For instance, if a TDS return was originally due in the financial year 2025-26 (ending March 31, 2026), the correction statement can now be filed until March 31, 2028 under the new provisions.

Legal Transition: Income Tax Act, 1961 to Be Repealed

The notification also confirmed that the Income Tax Act, 1961 will officially stand repealed on April 1, 2026, by virtue of Section 536 of the Income Tax Act, 2025. This marks a historic shift in India's taxation framework, replacing a law that has governed direct taxes for over six decades.

The new Act introduces several reforms aimed at simplification, digitisation, and better compliance, with this revised correction timeline being one such reform aimed at reducing ambiguity and administrative burden.

Income Tax Department's Advisory for Stakeholders

Deductors, collectors and other stakeholders involved in filing TDS and TCS returns are strongly advised to take note of these revised timelines and update their compliance systems accordingly. Timely corrections to TDS/TCS statements are critical to ensure accurate credit to deductees and to avoid penalties or disputes during assessments.

Tax professionals and compliance officers are encouraged to revisit pending or disputed TDS matters from recent financial years and evaluate whether any corrections need to be filed before the two-year window closes.