New in AIS for FY 2025-26: Partner TDS, Luxury TCS, Refund Interest

Your AIS (Annual Information Statement) for FY 2025-26 can hold entries that weren't there a year earlier. Three changes in the law that took effect in 2025 are behind most of them: TDS on what a firm pays its partners, TCS on luxury purchases above ₹10 lakh, and higher thresholds before banks and companies deduct TDS. Interest paid on income tax refunds also shows up in AIS, and many people notice it for the first time this year.

Here's what each entry is, whether it is income or a tax credit, and where it goes in your AY 2026-27 return. That return is still filed under the Income-tax Act, 1961, even though the Income-tax Act, 2025 has applied to income earned from 1 April 2026.

What's new at a glance

Partner TDS under section 194T

Until March 2025, a firm paid its partners salary, interest on capital or commission without deducting tax. The Finance (No. 2) Act, 2024 added section 194T. From 1 April 2025, a firm deducts TDS at 10% on salary, remuneration, commission, bonus and interest paid or credited to a partner, including amounts credited to the partner's capital account, once the total for the year exceeds ₹20,000.

So for FY 2025-26, partners see their firm in AIS for the first time, under TDS/TCS Information.

Worked example. Meera is a partner in a firm that credits her ₹6,00,000 of remuneration and ₹1,20,000 of interest on capital during FY 2025-26. The total, ₹7,20,000, is above ₹20,000, so the firm deducts ₹72,000.

What this means for her return:

• The ₹7,20,000 is still taxed as business income in her hands, not as salary, to the extent the firm was allowed to deduct it. Partners usually file ITR-3.
• The ₹72,000 is a tax credit. Claim it in the TDS schedule of her return.
• If AIS shows a different figure from the firm's books, she should check with the firm first. A wrong TDS figure needs a correction statement from the firm; AIS feedback changes only the pre-fill.

The partner's share of the firm's profit is a different thing. It is exempt in the partner's hands and section 194T doesn't apply to it, so it shouldn't appear as a TDS entry.

TCS on luxury goods above ₹10 lakh

Section 206C(1F) used to cover only motor vehicles costing more than ₹10 lakh. The Finance (No. 2) Act, 2024 let the government add other goods, and CBDT Notification 36/2025 (S.O. 1825(E)), which came into force on 22 April 2025, added ten categories:

• wristwatches
• art pieces such as antiques, paintings and sculptures
• collectibles such as coins and stamps
• yachts, rowing boats, canoes and helicopters
• sunglasses
• bags such as handbags and purses
• shoes
• sportswear and equipment such as golf kits and ski wear
• home theatre systems
• horses for racing and polo

When a seller covered by the provision sells you one of these for more than ₹10 lakh, it collects TCS at 1% of the price. The test applies to a single item, so two watches at ₹6 lakh each don't attract it.

Worked example. Karan buys a watch for ₹12,50,000 in December 2025. The seller collects ₹12,500 of TCS and files it against his PAN. It shows in his AIS under TDS/TCS Information.

• The ₹12,500 is not income. It's tax already paid on his behalf.
• He claims it in the TCS schedule of his AY 2026-27 return, where it reduces his tax or adds to his refund.
• The purchase itself isn't taxable, but it is a large spend on record. If the money came from income he hasn't reported elsewhere, that question can come up.

If a seller collected TCS but the entry doesn't show in AIS, ask the seller for the TCS certificate (Form 27D) and check that it filed its TCS statement with your correct PAN.

Interest on your income tax refund

When CPC (the Centralized Processing Centre) issues a refund, it usually adds interest under section 244A at 0.5% a month. If you got last year's refund during FY 2025-26, that interest shows in your FY 2025-26 AIS. The AIS FAQ lists interest on refund under Other Information.

This isn't a new category, but it's easy to miss, and it is taxable. The refund itself isn't income; the interest on it is, as income from other sources in the year you receive it.

Worked example. Your AY 2025-26 refund of ₹40,000 was credited in October 2025 with ₹1,600 of interest. Report ₹1,600 under income from other sources in your AY 2026-27 return. Our post on refund interest under section 437, formerly 244A shows how the interest is worked out.

Higher TDS thresholds: fewer entries, same income

From 1 April 2025, the Finance Act, 2025 raised several thresholds before TDS starts:

The trap is reading a missing TDS entry as missing income. A senior citizen who earned ₹90,000 of FD interest from one bank in FY 2025-26 may see no TDS against it. The interest is still taxable, and banks still report interest through their statements of financial transactions, so it can appear under SFT Information instead. Our guide to high-value transactions reported in AIS explains what SFT entries are.

TCS on sale of goods has stopped

Section 206C(1H) made large sellers collect 0.1% TCS on sales to a buyer above ₹50 lakh a year. It overlapped with TDS that buyers deduct under section 194Q, so the Finance Act, 2025 stopped it from 1 April 2025. Business owners who used to see these TCS entries in AIS won't see new ones for FY 2025-26. Purchases above ₹50 lakh can still carry TDS under section 194Q, deducted by the buyer.

Checking the new entries before you file

1. Open AIS for FY 2025-26 and go through TDS/TCS Information, SFT Information and Other Information.
2. For each new entry, decide: is it income, a tax credit, or both?
3. Match each to a document: the firm's ledger, a TCS certificate, the refund line in your intimation, a bank interest certificate.
4. Open TIS and check the value that will pre-fill your return. Our post on processed value vs accepted value explains which one fills the ITR.
5. Where an entry is wrong, give feedback, and keep the document that supports it.

myutils.me is an independent app, not affiliated with the Income Tax Department. It brings back AIS and TIS for each PAN you add when you sync it, so a partner or a family member's new entries are on one screen before you log in to the portal to file or give feedback.

FAQ

Is TDS under section 194T a tax on my share of the firm's profit?

No. It covers salary, remuneration, commission, bonus and interest the firm pays or credits to you. Your share of profit is exempt in your hands.

Is TCS on a luxury purchase an extra tax?

No. It's collected in advance against your tax for the year. You claim it as a credit in your return, and any excess comes back as a refund.

Does TCS apply to every purchase of a notified item?

Only when one item costs more than ₹10 lakh and the seller is one the provision covers. The 1% is on the sale price.

My bank deducted no TDS this year. Do I still pay tax on the interest?

Yes. The higher threshold only means the bank doesn't deduct tax up front. You report the interest and pay any tax due.

Is interest on my income tax refund taxable?

Yes. It is income from other sources in the year you receive it. The refund itself is not income.

Sources

• Memorandum explaining the Finance (No. 2) Bill, 2024 (section 194T and section 206C(1F))
• Memorandum explaining the Finance Bill, 2025 (TDS thresholds and section 206C(1H))
• AIS FAQ, Income Tax e-Filing portal
• Income Tax Department: Tax Collection at Source (TCS), including the goods notified under section 206C(1F) by CBDT Notification 36/2025 (S.O. 1825(E), 22 April 2025)