Income Tax Dept Launches TRACES 2.0: How new TDS portal works, what changes for taxpayers

Income Tax Dept Launches TRACES 2.0: The Income Tax Department has rolled out the upgraded TRACES 2.0 portal from April 1, 2026, marking a significant shift in how Tax Deducted at Source (TDS) compliance is managed under the new Income Tax Act, 2025. The revamped platform introduces a more intuitive interface, centralised access to tax records, and a simplified reporting structure aimed at reducing errors and improving transparency. With the new system now live, taxpayers, businesses and even property buyers can track TDS credits, download certificates and manage corrections more efficiently - all through a single-window digital platform.

What is TRACES 2.0?

TRACES - TDS Reconciliation Analysis and Correction Enabling System has long been the backbone of TDS compliance in India. The upgraded TRACES 2.0 portal replaces the earlier system with a more streamlined and user-friendly experience.

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The key objective is to simplify compliance under the new tax framework introduced from April 1, 2026. The platform integrates multiple services, reducing dependency on fragmented systems and making it easier for users to access and manage their TDS-related data in one place.

The move is part of a broader overhaul aimed at expanding digital reporting and making tax administration more transparent for both individuals and businesses.

How to access the new TRACES portal?

Taxpayers can access the upgraded portal through the official TRACES website. Those visiting the older TRACES link will automatically be redirected to the new platform, ensuring a seamless transition.

For non-resident taxpayers, a separate dedicated portal has been introduced to address specific compliance needs, offering tailored services for NRIs.

The login process remains largely familiar, but the navigation and layout have been redesigned for easier use, especially for first-time users.

What’s new on TRACES 2.0?

The upgraded portal comes with a redesigned interface and a centralised dashboard that brings all key TDS-related services together.

Users can now:

• View Form 26AS and TDS credit details in one place
• Download TDS certificates such as Form 16, 16A and 16B
• Track TDS credits and verify entries
• Submit corrections and access past records

A notable structural change is the introduction of a single “Tax Year” concept, replacing the earlier system of Previous Year and Assessment Year. This is expected to reduce confusion and simplify tax reporting.

There is also a dedicated section for compliance related to earlier financial years, allowing taxpayers to complete pending filings or corrections without navigating multiple sections.

New TDS forms: Forms 138 and 140 replace 24Q, 26Q

One of the most significant changes under the new tax regime is the replacement of existing TDS forms.

• Form 138 replaces Form 24Q and is used by employers to report TDS deducted from salaries. It also covers tax deducted on pensions and specified senior citizen incomes by banks.
• Form 140 replaces Form 26Q and is used for reporting TDS on non-salary payments such as commission, brokerage, professional fees and rent.

These forms continue to be filed quarterly but are designed to reduce manual errors, avoid mismatches and enable faster processing.

TCS rules revised: Rates cut to 2%

Alongside TDS changes, the government has also revised Tax Collected at Source (TCS) rates to reduce the upfront tax burden.

• Foreign travel packages will now attract a flat TCS rate of 2%, replacing the earlier 5 per cent rate up to Rs 10 lakh and 20 per cent beyond that threshold
• Education and medical remittances abroad will also be taxed at a reduced TCS rate of 2%, down from 5 per cent

These changes are expected to ease cash flow concerns for taxpayers making high-value transactions or remittances overseas.

TRACES is not a payment platform

While TRACES 2.0 enhances compliance and tracking, it does not handle TDS payments.

Taxpayers, including property buyers, must continue to deposit TDS through the Income Tax e-filing portal using the relevant forms such as Form 26QB. The TRACES portal comes into play after payment for downloading certificates, verifying details and tracking credits.