Tax Deducted at Source (TDS) is the backbone of withholding compliance under Indian income tax law. The Income Tax Act, 2025 — effective 1 April 2026 — consolidates 60+ individual TDS sections into just two: Section 392 (salary) and Section 393 (all other payments). This guide is a complete practitioner reference for the transition.
01 What Is TDS and Why Does It Matter?
TDS is a mechanism whereby the person making a specified payment (the deductor) is required to deduct tax at a prescribed rate at the time of payment — or credit, whichever is earlier — and remit it to the Government. The recipient (the deductee) receives credit for the tax deducted against the total tax liability computed on the return of income.
The fundamental architecture is retained under both statutes: obligation to deduct → deposit → issue certificate → file quarterly statement. What changes is the organisation, section references, and the introduction of new numeric payment codes for challan and return filing.
02 Structural Overhaul: 60+ Sections Become 2
Under the Old Act (ITA 1961), TDS provisions were spread across Chapter XVII-B — Sections 192 to 194T. The New Act (ITA 2025) makes a dramatic structural simplification:
- All 60+ TDS sections consolidated into Section 392 (salary TDS) and Section 393 (all other TDS).
- Section 393 uses an internal Table structure — Table for Residents, Table for Non-Residents, Table for Any Person — with serial numbers identifying each payment type.
- New numeric Payment Codes (1001–1067) replace individual section numbers in TDS challans and quarterly returns from 1 April 2026.
- Rates and threshold limits are unchanged — this is a structural reform, not a policy change.
⚠️ Critical Alert — Effective 1 April 2026
Quoting old section numbers (194C, 194J, 194H, etc.) in TDS challans and returns will cause system-level validation errors from 1 April 2026. Use the new Section 393 Table reference and Payment Code. Update your ERP/accounting software before this date.
03 Key Provision Comparison
| Aspect | Old Act (ITA 1961) | New Act (ITA 2025) | Remarks |
|---|---|---|---|
| Governing Chapter | Chapter XVII-B (Ss. 192–194T) | Sections 392–393 | Structural consolidation |
| TDS on Salary | Section 192 | Section 392 | New default regime applies automatically |
| TDS on Interest | Section 194A | S.393(1) [T: Sl.5] | Split into 3 payment codes by payer type |
| TDS on Contractors | Section 194C | S.393(1) [T: Sl.6(i)] | Codes 1023 / 1024 |
| TDS on Professional Fees | Section 194J | S.393(1) [T: Sl.6(iii)] | 2% / 10% rates retained |
| TDS on Rent | Section 194I | S.393(1) [T: Sl.2(ii)] | Sub-clauses (a) and (b) retained |
| TDS on Property Purchase | Section 194IA | S.393(1) [T: Sl.3(i)] | 1% rate; Code 1010 |
| TDS on E-Commerce | Section 194O | S.393(1) [T: Sl.8(v)] | 1% rate; Code 1035 |
| TDS on Partners | Section 194T | S.393(3) [T: Sl.7] | 10% rate; Code 1067 |
| PAN Not Furnished | Section 206AA | Retained separately | 20% or twice applicable rate |
| Lower/Nil Deduction Cert. | Section 197 (Form 13) | Retained; online-only | AI-based processing piloted |
| TDS Statement | Form 24Q / Form 26Q | Form 143 (replaces 24Q) | Mandatory digital filing |
| TDS Certificate | Form 16 / Form 16A | Form 130 (3 parts) | Senior citizen annexure added |
| TDS Credit Document | Form 26AS / AIS | AIS/TIS is primary | Form 26AS deprecated |
04 Complete TDS Mapping: Old Sections → New Act 2025
This ready-reckoner maps every Old Act TDS section to its new Section 393 Table reference and numeric Payment Code under the Income Tax Act, 2025 and Income Tax Rules, 2026 (draft).
| Old Section | Nature of Payment | New Section Ref. (ITA 2025) | Payment Code | TDS Rate |
|---|---|---|---|---|
| A. SALARY PAYMENTS — SECTION 392 | ||||
| 192 | Salary — Govt. employees (other than Union Govt.) | Section 392 | 1001 | Slab Rate |
| 192 | Salary — Non-Govt. employees | Section 392 | 1002 | Slab Rate |
| 192 | Salary — Indian Government employees | Section 392 | 1003 | Slab Rate |
| 192A | PF Withdrawal — premature / accumulated balance | Section 392(7) | 1004 | 10% |
| B. PAYMENTS TO RESIDENTS — SECTION 393(1) | ||||
| 194D | Insurance Commission | S.393(1) [T: Sl.1(i)] | 1005 | 5% |
| 194H | Commission or Brokerage (other than insurance) | S.393(1) [T: Sl.1(ii)] | 1006 | 5% |
| 194IB | Rent by Individual/HUF (Non-Audit) — ≥ ₹50,000/month | S.393(1) [T: Sl.2(i)] | 1007 * | 2% |
| 194I(a) | Rent of Plant, Machinery or Furniture | S.393(1) [T: Sl.2(ii).D(a)] | 1008 | 2% |
| 194I(b) | Rent of Land, Building or Furniture | S.393(1) [T: Sl.2(ii).D(b)] | 1009 | 10% |
| 194IA | Transfer of Immovable Property (other than agri. land) | S.393(1) [T: Sl.3(i)] | 1010 * | 1% |
| 194IC | Monetary consideration — Joint Development Agreement (JDA) | S.393(1) [T: Sl.3(ii)] | 1011 | 10% |
| 194LA | Compensation on compulsory acquisition of immovable property | S.393(1) [T: Sl.3(iii)] | 1012 | 10% |
| 194K | Dividends distributed by Mutual Funds | S.393(1) [T: Sl.4(i)] | 1013 | 10% |
| 194LBA | Income from Business Trust (REIT/InvIT) — Interest/Dividend/Rent | S.393(1) [T: Sl.4(ii)] | 1014–1016 | 10% |
| 194LBB | Payments by Category I/II AIFs to unit holders | S.393(1) [T: Sl.4(iii)] | 1017 | 10% |
| 194LBC | Income distributed by Securitisation Trust | S.393(1) [T: Sl.4(iv)] | 1018 | 25% |
| 193 | Interest on Securities | S.393(1) [T: Sl.5(i)] | 1019 | 10% |
| 194A | Interest — Bank/PO — Senior Citizen | S.393(1) [T: Sl.5(ii)] | 1020 | 10% |
| 194A | Interest — Bank/PO — Others | S.393(1) [T: Sl.5(ii)] | 1021 | 10% |
| 194A | Interest — Other Payers (Non-Bank/PO) | S.393(1) [T: Sl.5(iii)] | 1022 | 10% |
| 194C | Contract Payment — Individual/HUF | S.393(1) [T: Sl.6(i)] | 1023 | 1% |
| 194C | Contract Payment — Others (Companies, Firms, etc.) | S.393(1) [T: Sl.6(i)] | 1024 | 2% |
| 194M | Payment by Individual/HUF (Non-Audit) — Contractor/Professional | S.393(1) [T: Sl.6(ii)] | 1025 * | 2% |
| 194J | Technical Fees, Royalty (Cinematographic), Call Centre | S.393(1) [T: Sl.6(iii).D(a)] | 1026 | 2% |
| 194J | Fees for Professional Services | S.393(1) [T: Sl.6(iii).D(b)] | 1027 | 10% |
| 194J | Director Fees / Non-Salary Commission | S.393(1) [T: Sl.6(iii).D(b)] | 1028 | 10% |
| 194 | Dividends (including Preference Shares) | S.393(1) [T: Sl.7] | 1029 | 10% |
| 194DA | Life Insurance Policy — taxable sum including bonus | S.393(1) [T: Sl.8(i)] | 1030 | 5% |
| 194Q | Purchase of Goods | S.393(1) [T: Sl.8(ii)] | 1031 | 0.1% |
| 194P | Specified Senior Citizen (bank deducts and files return) | S.393(1) [T: Sl.8(iii)] | 1032 | Slab Rate |
| 194R | Perquisite/Benefit to Business or Profession — Cash/Kind/Mixed | S.393(1) [T: Sl.8(iv)] | 1033/1034 | 10% |
| 194O | E-Commerce Operator — sales/services via platform | S.393(1) [T: Sl.8(v)] | 1035 | 1% |
| 194S | VDA Transfer — Individual/HUF (Non-Audit) | S.393(1) [T: Sl.8(vi)] | 1036 * | 1% |
| 194S | VDA Transfer — Others (Non-Individual/HUF) | S.393(1) [T: Sl.8(vi)] | 1037 | 1% |
| 194S | VDA Transfer — Cash/Kind/Mixed consideration | S.393(1) [T: Sl.8(vi)] | 1038 | 1% |
| C. PAYMENTS TO ANY PERSON — SECTION 393(3) | ||||
| 194B | Winnings from Lottery, Crossword, Card Games, Gambling — Cash | S.393(3) [T: Sl.1] | 1058 | 30% |
| 194B | Winnings from Lottery, Crossword, Card Games, Gambling — Kind | S.393(3) [T: Sl.1] | 1059 | 30% |
| 194BA | Online Game Winnings — Cash | S.393(3) [T: Sl.2] | 1060 | 30% |
| 194BA | Online Game Winnings — Kind (tax paid before release) | S.393(3) [T: Sl.2] | 1061 | 30% |
| 194BB | Winnings from Horse Race | S.393(3) [T: Sl.3] | 1062 | 30% |
| 194G | Commission on Lottery Tickets | S.393(3) [T: Sl.4] | 1063 | 5% |
| 194N | Cash Withdrawal — Co-operative Society | S.393(3) [T: Sl.5.D(a)] | 1064 | 2% |
| 194N | Cash Withdrawal — Others | S.393(3) [T: Sl.5.D(a)] | 1065 | 2% |
| 194EE | NSS / Section 80CCA Payment | S.393(3) [T: Sl.6] | 1066 | 10% |
| 194T | Payment to Partners — Salary, Remuneration, Commission, Bonus, Interest | S.393(3) [T: Sl.7] | 1067 | 10% |
📌 Note on Payment Codes marked *
Codes 1007, 1010, 1025 and 1036 relate to Individual/HUF deductors not liable to tax audit (personal PAN-to-PAN transactions). These appear to have been inadvertently omitted from Draft Forms 138, 140 and 141 and are inferred from the sequential pattern of the draft rules. Confirm against the final CBDT notification before use.
05 TDS Rate Comparison
TDS rates are unchanged under the New Act. The reform is purely structural. Key rates are confirmed below alongside the new section references.
| Old Section | Nature of Payment | Old Rate | New Section Ref. | Rate (Unchanged) | Note |
|---|---|---|---|---|---|
| 192 | Salary | Slab rates | Section 392 | Slab rates | New regime is default |
| 193 | Interest on Securities | 10% | S.393(1)[Sl.5(i)] | 10% | — |
| 194 | Dividends | 10% | S.393(1)[Sl.7] | 10% | — |
| 194A | Interest — Bank/PO | 10% | S.393(1)[Sl.5(ii)] | 10% | Split into 3 codes |
| 194C | Contractor (Individual/HUF) | 1% | S.393(1)[Sl.6(i)] | 1% | — |
| 194C | Contractor (Others) | 2% | S.393(1)[Sl.6(i)] | 2% | — |
| 194H | Commission / Brokerage | 5% | S.393(1)[Sl.1(ii)] | 5% | — |
| 194I(a) | Rent — Plant & Machinery | 2% | S.393(1)[Sl.2(ii).D(a)] | 2% | — |
| 194I(b) | Rent — Land/Building | 10% | S.393(1)[Sl.2(ii).D(b)] | 10% | — |
| 194J | Professional Services | 10% | S.393(1)[Sl.6(iii).D(b)] | 10% | — |
| 194J | Technical / Call Centre | 2% | S.393(1)[Sl.6(iii).D(a)] | 2% | — |
| 194IA | Property Purchase | 1% | S.393(1)[Sl.3(i)] | 1% | — |
| 194O | E-Commerce Operators | 1% | S.393(1)[Sl.8(v)] | 1% | — |
| 194S | VDA / Crypto Transfer | 1% | S.393(1)[Sl.8(vi)] | 1% | VDA definition broadened |
| 194T | Payment to Partners | 10% | S.393(3)[Sl.7] | 10% | New section in Old Act |
| 206AA | PAN not furnished | 20% / higher | Retained separately | 20% or twice rate | — |
06 Revised Threshold Limits
| Nature of Payment | Old Threshold (₹) | New Threshold (₹) | Notes |
|---|---|---|---|
| Interest — Bank/Post Office | 40,000 (50K Sr. Citizen) | 50,000 (75K Sr. Citizen) | Per bank, per FY |
| Interest — Others | 5,000 | 10,000 | Per payer, per FY |
| Contractor payments | 30,000 / 1,00,000 | 50,000 / 1,50,000 | Single / Aggregate per FY |
| Rent | 2,40,000 p.a. | 3,00,000 p.a. | Annual aggregate |
| Professional / Technical fees | 30,000 | 50,000 | Per payer, per FY |
| Commission / Brokerage | 15,000 | 20,000 | Per payer, per FY |
| Lottery / Game Winnings | 10,000 | 10,000 | Unchanged |
07 Procedural and Compliance Changes
7.1 Forms Renumbered
- Form 16 → Form 130 — TDS certificate for salary; now 3 parts + senior citizen annexure
- Form 24Q → Form 143 — Quarterly TDS return for salary payments
- Form 12BB → Form 124 — Employee claims for HRA, LTC, home loan interest
- Forms 26QB/26QC/26QD/26QE → Form 141 — Single unified challan for property/rent TDS
7.2 Quarterly TDS Statement Due Dates
- Q1 (April–June): 31st July — unchanged
- Q2 (July–September): 31st October — unchanged
- Q3 (October–December): 31st January — unchanged
- Q4 (January–March): 31st May for non-salary; 15th June for salary
7.3 TDS Deposit Due Date
7th of the following month (30th April for March deductions) is retained under Income Tax Rules, 2026, Rule 218 — corresponding to old Rule 30. No policy change.
7.4 Consequences of Default
- Short deduction: Interest at 1% per month — unchanged (Section 398(3) of New Act)
- Late deposit: Interest at 1.5% per month — unchanged
- Late TDS statement: ₹200/day penalty under Section 234E — retained
- Failure to deduct: Section 448 of New Act — penalty equal to tax not deducted
- Non-remittance prosecution: Retained with stricter triggers under New Act
08 New and Expanded Provisions
- Virtual Digital Assets (VDA): Section 194S now in S.393(1)[Sl.8(vi)] with broadened definition — NFTs and tokenised instruments included; codes 1036–1038.
- Buy-Back of Shares: Post Finance Act 2024, buy-back proceeds are taxable as dividend; 10% TDS now explicitly codified.
- Online Gaming (194BA): Expanded to offshore platforms accessible from India; codes 1060/1061; 30% rate.
- Payment to Partners (194T): Now at S.393(3)[Sl.7] — 10% TDS on salary, remuneration, bonus, commission and interest paid to partners; code 1067.
- Significant Economic Presence (SEP): Non-resident entities with SEP in India face explicit TDS withholding on business connection income.
09 Transition Checklist for Deductors
📋 Action Required Before 1 April 2026
- Update ERP / accounting software TDS masters with new Section 392/393 Table references and payment codes 1001–1067.
- Replace old section codes in challan templates — 194C, 194J, 194H etc. cause validation errors from 1 April 2026.
- Switch from Form 24Q to Form 143 for quarterly salary TDS return filing.
- Replace Form 16 with Form 130 for TDS certificates issued for FY 2026-27 onwards.
- Replace 4 separate challans (26QB/26QC/26QD/26QE) with unified Form 141.
- Reconcile all outstanding Form 13 lower deduction certificates to reference correct New Act provisions.
- Ensure PAN–Aadhaar linking for all deductees to avoid 20% higher TDS under Section 206AA.
- Update all processes to use AIS/TIS as the primary TDS credit document — Form 26AS is deprecated.
10 Judicial Precedent and Interpretive Continuity
The New Act contains a general savings clause preserving all assessments, appeals, and proceedings initiated under the Old Act. Judicial interpretations of substantively identical provisions remain persuasive under the corresponding New Act provisions.
The existing jurisprudence on the meaning of "work" under Section 194C, the distinction between professional and technical services under Section 194J, and the scope of "rent" under Section 194I — continues to apply. Practitioners must track CBDT Circulars and Notifications post-April 2026 for any departures on specific issues.
11 Conclusion
The Income Tax Act, 2025 consolidates 60+ TDS sections into just two — Section 392 and Section 393. This is a structural simplification that does not change any rate or threshold, but fundamentally changes how TDS is referenced, reported, and filed from 1 April 2026.
The key priority for every deductor is updating software payment codes and training compliance teams on the new Table-based reference system well before the transition date.
For TDS advisory, notice response, or lower deduction certificate assistance — contact Tax Relief India at taxreliefindia.com or call 8052463233.