From 1 April 2026, the Income Tax Act 2025 replaces the 1961 Act — and with it, over 40 individual TDS sections (192, 193, 194A, 194B, 194C… all the way to 194T, 194S, 195) are dissolved into a single, consolidated provision: Section 393. TDS certificates, quarterly returns, declarations and TAN applications will all carry new form numbers. Every employer, company, and individual responsible for deducting tax needs to understand this shift before 1 April 2026.
Old Act TDS Chapter: Chapter XVII-B, Sections 192–206CB (40+ sections)
New Act TDS Chapter: Chapter XIX-B, Sections 392–402 (11 sections)
Main TDS Section: Section 393 (replaces all individual 194-series sections)
Effective from: 1 April 2026 (Tax Year 2026-27 onwards)
The Income Tax Act 1961's TDS framework had grown organically over 60 years. What started with a handful of provisions had expanded to over 40 separate sections — 192, 193, 194, 194A, 194B, 194BA, 194BB, 194C, 194D, 194DA, 194E, 194EE, 194G, 194H, 194-I, 194-IA, 194-IB, 194-IC, 194J, 194K, 194LA, 194LB, 194LBA, 194LBB, 194LBC, 194LC, 194M, 194N, 194-O, 194P, 194Q, 194R, 194S, 194T, 195, 196, 196A, 196B, 196C, 196D and several others — each with its own rate, threshold, exception, note, and amendment history. The result was a compliance minefield, especially for non-specialist finance and accounts teams.
The new Act's stated goal — as reflected in the ICAI's publication of the Income Tax Act 2025 — is simplification without substantive rate change. The TDS consolidation achieves exactly this: all deduction obligations for resident payments are now in one Table under Section 393(1), non-resident payments in Section 393(2), and lottery/gaming/partner payments in Section 393(3). The rates and thresholds are largely preserved, but the legal architecture is drastically cleaner.
Under the Income Tax Act 2025, the TDS framework is housed in Chapter XIX — Collection and Recovery of Tax, sub-part B: Deduction and Collection at Source. The key sections are:
| New Section | Subject Matter | Old Section(s) Replaced |
|---|---|---|
| Section 392 | TDS on Salary & accumulated balance due to employees (including ESOP for start-ups) | 192, 192A |
| Section 393(1) | TDS on payments to residents — single table with 8 categories | 193, 194, 194A to 194T, 194-O, 194-IA, 194-IB, 194-IC, 194S, 194Q, 194R |
| Section 393(2) | TDS on payments to non-residents — 17 entries | 195, 195A, 196, 196A, 196B, 196C, 196D, 194LB, 194LC, 194LBA etc. |
| Section 393(3) | TDS on payments to any person — lotteries, online games, horse racing, lottery agents, cash withdrawals, NSS withdrawals, partner payments | 194B, 194BA, 194BB, 194EE, 194N, 194T |
| Section 393(4) | No deduction at source — consolidated list of exemptions | 197A (various sub-provisions) |
| Section 393(6) | Declaration for no-deduction (replaces Form 15G / 15H) | 197A |
| Section 394 | Tax Collection at Source (TCS) | 206C |
| Section 395 | Certificates — lower/nil deduction, TDS certificates to deductees | 197, 203, 206C(9) |
| Section 396 | Tax deducted is income received | 198 |
| Section 397 | Compliance & Reporting — TAN, quarterly returns, payment to govt, higher TDS for non-PAN | 203A, 206AA, 200, 206CC |
| Section 398 | Consequences of failure — deemed assessee in default, interest at 1% per month | 201, 206C(7) |
| Section 399 | Processing of TDS/TCS statements | 200A, 206CB |
| Section 400 | Power of Central Government to relax provisions | 197A, 206C |
| Section 401 | Bar against direct demand on assessee | 205 |
| Section 402 | Interpretation / Definitions for TDS chapter | 192 to 206CB (definitions scattered) |
The following table maps every major TDS section from the Income Tax Act 1961 to its corresponding entry in Section 393 of the Income Tax Act 2025. This is drawn directly from the Tabular Mapping published by the ICAI in its publication of the new Act.
| Old Section (1961 Act) | Nature of Payment | New Section (2025 Act) | Rate | Threshold |
|---|---|---|---|---|
| 192 | Salary | Section 392(1) | Average rate | Taxable income |
| 192A | Accumulated balance from provident fund | Section 392 (part) | 10% | ₹50,000 |
| 193 | Interest on securities | Sec 393(1) — Sl. No. 5(i) | Rates in force | ₹10,000 |
| 194 | Dividend (domestic company) | Sec 393(1) — Sl. No. 7 | 10% | Nil |
| 194A | Interest other than on securities (banks, co-op, post office) | Sec 393(1) — Sl. No. 5(ii) | Rates in force | ₹1,00,000 (senior citizen); ₹50,000 (others) |
| 194A | Interest other than on securities (specified persons) | Sec 393(1) — Sl. No. 5(iii) | Rates in force | ₹10,000 |
| 194B | Winnings from lottery, crossword puzzle, card game | Sec 393(3) — Sl. No. 1 | Rates in force | ₹10,000 per transaction |
| 194BA | Winnings from online games | Sec 393(3) — Sl. No. 2 | Rates in force | Net winnings (special rule) |
| 194BB | Winnings from horse race | Sec 393(3) — Sl. No. 3 | Rates in force | ₹10,000 per transaction |
| 194C | Contractor (designated persons / companies) | Sec 393(1) — Sl. No. 6(i) | 1% (individual/HUF); 2% (others) | ₹30,000 per contract; ₹1,00,000 aggregate |
| 194C | Contractor (individuals/HUF paying sub-threshold entities) | Sec 393(1) — Sl. No. 6(ii) | 2% | ₹50,00,000 |
| 194D | Insurance commission | Sec 393(1) — Sl. No. 1(i) | Rates in force | ₹20,000 |
| 194DA | Payment under life insurance policy | Sec 393(1) — Sl. No. 8(i) | 2% on income in such sum | ₹1,00,000 |
| 194EE | Payments from NSS deposits | Sec 393(3) — Sl. No. 6 | 10% | ₹2,500 |
| 194G | Commission on lottery tickets | Sec 393(3) — Sl. No. 4 | 2% | ₹20,000 |
| 194H | Commission or brokerage (not insurance) | Sec 393(1) — Sl. No. 1(ii) | 2% | ₹20,000 |
| 194-I | Rent (specified persons) | Sec 393(1) — Sl. No. 2(ii) | 2% (machinery/plant/equipment); 10% (land/building/furniture) | ₹50,000 per month |
| 194-IA | TDS on purchase of immovable property | Sec 393(1) — Sl. No. 3(i) | 1% of consideration or stamp duty value (whichever higher) | ₹50,00,000 |
| 194-IB | Rent by individuals/HUF (non-audit) | Sec 393(1) — Sl. No. 2(i) | 2% | ₹50,000 per month |
| 194-IC | Payment under joint development agreement | Sec 393(1) — Sl. No. 3(ii) | 10% | Nil |
| 194J | Fees for professional/technical services, royalty, director fees | Sec 393(1) — Sl. No. 6(iii) | 2% (technical/royalty for films/call centres); 10% (others) | ₹50,000; Nil for director fees |
| 194K | Income from units of mutual fund | Sec 393(1) — Sl. No. 4(i) | 10% | ₹10,000 |
| 194LA | Compensation on compulsory acquisition of immovable property | Sec 393(1) — Sl. No. 3(iii) | 10% | ₹5,00,000 |
| 194LBA | Income from units of Business Trust (resident) | Sec 393(1) — Sl. No. 4(ii) | 10% | Nil |
| 194LBB | Income from units of investment fund | Sec 393(1) — Sl. No. 4(iii) | 10% | Nil |
| 194LBC | Income from securitisation trust | Sec 393(1) — Sl. No. 4(iv) | 10% | Nil |
| 194M | Payment by individual/HUF for contract, professional/commission fees | Sec 393(1) — Sl. No. 6(ii) | 2% | ₹50,00,000 |
| 194N | Cash withdrawal from bank/post office | Sec 393(3) — Sl. No. 5 | 2% | ₹3 crore (co-operative); ₹1 crore (others) |
| 194-O | TDS by e-commerce operator on participant's sales | Sec 393(1) — Sl. No. 8(v) | 0.1% of gross amount | Nil |
| 194P | TDS for specified senior citizens (no ITR filing) | Sec 393(1) — Sl. No. 8(iii) | Rates in force on total income | As applicable |
| 194Q | TDS on purchase of goods by buyer | Sec 393(1) — Sl. No. 8(ii) | 0.1% | ₹50,00,000 |
| 194R | TDS on benefit/perquisite from business or profession | Sec 393(1) — Sl. No. 8(iv) | 10% | ₹20,000 |
| 194S | TDS on transfer of virtual digital asset (VDA) | Sec 393(1) — Sl. No. 8(vi) | 1% | Nil |
| 194T | TDS on payments to partners (salary, commission, bonus, interest) | Sec 393(3) — Sl. No. 7 | 10% | ₹20,000 |
| 195 | TDS on any sum payable to non-resident (other than salary) | Sec 393(2) — Sl. No. 17 | Rates in force | Nil |
| 196A | Income in respect of units of offshore fund (non-resident) | Sec 393(2) — Sl. No. 11 | 10% | Nil |
| 196B | LTCG on units of offshore fund (non-resident) | Sec 393(2) — Sl. No. 12 | 12.5% | Nil |
| 196C | Income from bonds/GDRs (non-resident) | Sec 393(2) — Sl. No. 13 | 10% | Nil |
| 196D | LTCG on bonds/GDRs (non-resident) | Sec 393(2) — Sl. No. 14 | 12.5% | Nil |
| 194LC | Interest on borrowing in foreign currency — infrastructure bond / long-term bond | Sec 393(2) — Sl. Nos. 2, 3, 4 | 5% / 4% / 9% | Nil |
| 194LB | Interest paid by infrastructure debt fund to non-resident | Sec 393(2) — Sl. No. 5 | 5% | Nil |
| 194LBA (non-res) | Business Trust distribution (non-resident) | Sec 393(2) — Sl. Nos. 6, 7 | 5% / 10% / Rates in force | Nil |
| 194LBB (non-res) | Investment fund income (non-resident) | Sec 393(2) — Sl. No. 8 | Rates in force | Nil |
| 194LBC (non-res) | Securitisation trust income (non-resident) | Sec 393(2) — Sl. No. 9 | Rates in force | Nil |
| 194E | Payment to non-resident sportsman/entertainer | Sec 393(2) — Sl. No. 1 | 20% | Nil |
| 196 / FII | FII / specified fund securities income | Sec 393(2) — Sl. Nos. 15, 16 | 20% / 10% | Nil |
| 206C | Tax Collection at Source | Section 394 | As per TCS table | As per TCS table |
You no longer need to look up "which 194-section applies" — instead you look at the single Section 393 Table, find the nature of payment, and the rate and threshold are right there. The total number of TDS provisions to memorise goes from 40+ individual sections to one structured table with 8 resident categories, 17 non-resident categories, and 7 other categories.
Managing TDS compliance under the new Income Tax Act 2025 involves updating payroll software to Section 392, transitioning from Form 16 to Form 130, revising vendor TDS workings to Section 393, and filing quarterly returns under the new form numbers. Our team handles TDS restructuring, Form 130 issuance, and TAN-level compliance for businesses and employers across India.
Insurance commission (previously Section 194D) is taxed at rates in force with a ₹20,000 threshold. All other commissions and brokerage (previously Section 194H) attract 2% TDS with the same ₹20,000 threshold. The deductor for non-insurance commission must be a "specified person" (defined as those maintaining accounts under tax audit).
For individuals and HUFs not required to tax audit (previously Section 194-IB): 2% TDS on rent exceeding ₹50,000 per month. For specified persons (previously Section 194-I): 2% for machinery/plant/equipment and 10% for land, building, furniture, or fittings, same ₹50,000/month threshold. TDS is deducted on payment for the last month of the year or last month of tenancy, whichever is applicable.
Purchase of immovable property (previously Section 194-IA): 1% TDS on consideration or stamp duty value, whichever is higher, above ₹50 lakhs. Joint development agreement payments (previously Section 194-IC): 10% TDS, no threshold. Compulsory acquisition compensation (previously Section 194LA): 10% TDS, threshold ₹5 lakhs.
Mutual fund income (previously Section 194K), Business Trust distributions, Investment fund income, and Securitisation trust income — all uniformly attract 10% TDS. Mutual fund threshold remains ₹10,000; others have no threshold.
The interest TDS thresholds have been significantly enhanced from the old Act. Banks, co-operative banks, and post offices (previously Section 194A): ₹1,00,000 for senior citizens and ₹50,000 for others (up from ₹50,000 and ₹40,000 respectively). Specified persons: ₹10,000.
This category consolidates Sections 194C, 194J, and 194M. For contracts by designated persons (large companies): 1% for individual/HUF contractors, 2% for others. Threshold ₹30,000 per contract or ₹1,00,000 aggregate. Professional/technical/royalty/director fees by specified persons: 2% for technical services and film royalty; 10% for professional services, other royalty, and director remuneration. Threshold ₹50,000 (nil for director fees).
Dividend (previously Section 194) declared by any domestic company: 10% TDS, no threshold. TDS must be deducted before making any distribution or payment.
This catchall category covers life insurance maturity (2% on income portion, ₹1 lakh threshold), goods purchases above ₹50 lakhs (0.1%), senior citizen TDS-in-lieu-of-ITR, business/profession perquisites (10%, ₹20,000), e-commerce operator payments (0.1%, no threshold), and virtual digital assets (1%, no threshold).
Section 393(2) of the new Act consolidates all TDS obligations on non-resident payments. The key principle from the old Section 195 is preserved and expanded: the obligation to deduct tax under Section 393(2) Sl. No. 17 extends to all persons — resident or non-resident — whether or not the non-resident has a residence, place of business, business connection, or any other presence in India.
For payments to non-resident sportsmen, entertainers, and sports associations (previously Section 194E): 20% TDS. For interest on foreign currency borrowings — infrastructure bonds (pre-1 July 2023): 5% TDS. For rupee-denominated bonds: 5% TDS. For listed IFSC bonds: 4% (post-April 2020, pre-July 2023) or 9% (post-July 2023). For FII/specified fund securities income: 20% (or lower DTAA rate if applicable). For all other non-resident payments (the general provision): rates in force.
Section 393(2) Sl. No. 17 (old Section 195) specifically states that the obligation extends to all persons regardless of their own residency status or whether the non-resident payee has any presence in India. Any person paying a sum to a non-resident that is chargeable under the Act must deduct TDS, with no exception for the payer being based outside India.
The Draft Income Tax Rules 2026 introduce entirely new form numbering. All existing TDS forms (16, 16A, 24Q, 26Q, 27Q etc.) are replaced. Here is the complete mapping drawn from Rule 215 (certificates) and Rule 219 (quarterly returns) of the Draft IT Rules 2026:
| Old Form | Purpose | New Form No. | Due Date |
|---|---|---|---|
| Form 16 | TDS certificate — Salary (Section 192) | Form No. 130 | 15th June of the FY following the tax year |
| Form 16A | TDS certificate — Non-salary payments (Sections 193–196D) | Form No. 131 | Within 15 days from due date of quarterly return |
| Form 16B | TDS certificate — Immovable property purchase, rent by individual/HUF, individual/HUF contractor payments, VDA | Form No. 132 | Within 15 days from due date of challan-cum-statement |
| Form 27D | TCS certificate (Section 206C) | Form No. 133 | Within 15 days from due date of quarterly TCS return |
| Old Form | Purpose | New Form No. |
|---|---|---|
| Form 24Q | Quarterly TDS return — Salary (Section 192) and senior citizen special provision (Section 393(1) Sl. No. 8(iii)) | Form No. 138 |
| Form 26Q | Quarterly TDS return — Non-salary payments to residents (Section 393(1) other than Sl. No. 8(iii)), Section 392(7), Section 393(3) for resident deductees | Form No. 140 |
| Form 27Q | Quarterly TDS return — Payments to non-residents (Sections 392(7), 393(2), 393(3) for non-resident deductees) | Form No. 144 |
| Form 27EQ | Quarterly TCS return (Section 394) | Form No. 143 |
| Form 27A | Control chart / verification for TDS return | Form No. 149 |
| Old Form | Purpose | New Form No. | New Rule |
|---|---|---|---|
| Form 15G / 15H | Declaration for no-deduction (resident) under Section 393(6) | Form No. 121 | Rule 211 |
| Form 12B | Salary particulars furnished by employee to employer | Form No. 122 | Rule 204 |
| Form 12BB | Evidence of claims by employee for TDS on salary | Form No. 124 | Rule 205 |
| Form 10F / 15CB (non-res declaration) | Declaration by senior citizen to specified bank | Form No. 125 | Rule 208 |
| Form 13 | Application for lower/nil TDS or TCS certificate | Form No. 128 | Rule 213 |
| Form 15CA | Information for payment to non-resident (Part A/B/C) | Form No. 145 | Rule 220 |
| Form 49B (TAN) | TAN application — Government entity | Form No. 134 | Rule 216 |
| Form 49B (TAN) | TAN application — Non-government entity | Form No. 135 | Rule 216 |
| Form 26B (refund claim) | Refund claim for excess TDS deposited by deductor | Form No. 139 | Rule 219(6) |
| Form 26AS / AIS | Annual Information Statement | Continued as AIS (Section 509) | Rule 245 |
| Challan-cum-statement | For immovable property purchase, rent, contractor (individual/HUF), VDA | Form No. 141 | Rule 219(5) |
| VDA exchange quarterly statement | Where exchange pays tax on behalf of buyer | Form No. 142 | Rule 219(2) |
The mechanism for obtaining a lower or nil TDS certificate (previously Section 197) is preserved in Section 395. The payee applies to the Assessing Officer in Form No. 128 (old Form 13), and on satisfaction that the total income justifies lower deduction, the AO issues a certificate specifying the rate. The certificate is valid until its specified date and the deductor must deduct at that rate for the entire validity period.
For non-resident payments under Section 393(2) Sl. No. 17 (old Section 195), the payer may apply under Section 395(2) for determination of the chargeable proportion — meaning TDS applies only on the part of the sum that is actually chargeable to tax in India.
The TAN application obligation (old Section 203A) continues under Section 397(1). The higher TDS rate for non-PAN (old Section 206AA) is now Section 397(2): if a deductee fails to furnish PAN, TDS is deducted at the higher of (a) the rate specified; (b) rates in force; or (c) 5% for goods purchase (Sl. No. 8(ii)) and e-commerce (Sl. No. 8(v)), or 20% in all other cases. The old 20% rate for non-PAN is retained as the general rule.
Quarterly TDS return due dates (Section 397(3) / Rule 219) remain unchanged: Q1 by 31 July, Q2 by 31 October, Q3 by 31 January, Q4 by 31 May of the following year.
If a deductor fails to deduct or pay TDS, they are deemed an assessee in default under Section 398(1) — same as old Section 201. The interest rate on the shortfall remains at 1% per month from the date tax was deductible to the date of deduction, and 1.5% per month from the date of deduction to the date of payment to the government.
The protection from default status (old Section 201(1) proviso) is retained in Section 398(2): a deductor is not deemed in default if the payee has filed their ITR, included the amount in their income, and paid the tax — subject to a CA certificate in Form No. 149 (old Form 26A/27BA).
The most significant practical changes in TDS under the new Act — beyond renaming — are:
Section 393 of the Income Tax Act 2025 is the single consolidated TDS section that replaces all 40+ individual TDS sections (192, 193, 194, 194A through 194T, 194-O, 194-IA, 194-IB, 194-IC, 194S, 195, etc.) of the Income Tax Act 1961. It contains three Tables: Section 393(1) for payments to residents (8 categories), Section 393(2) for payments to non-residents (17 categories), and Section 393(3) for payments to any person (lotteries, online games, horse racing, partner payments, cash withdrawals). It is effective from 1 April 2026.
Section 194C is replaced by Section 393(1) Table Sl. No. 6(i) for contractor payments by designated persons (companies), and Section 393(1) Table Sl. No. 6(ii) for contractor payments by individuals and HUFs. Rates remain 1% for individual/HUF contractors and 2% for others. Thresholds: ₹30,000 per contract or ₹1,00,000 in aggregate.
Form 16 (the TDS certificate for salary income) is replaced by Form No. 130 under Rule 215 of the Draft Income Tax Rules 2026. The due date remains 15th June of the financial year immediately following the tax year. Part A and Part B of Form 16 continue as sections of Form No. 130.
Form 24Q (quarterly salary TDS return) is replaced by Form No. 138. Form 26Q (quarterly non-salary TDS return for residents) is replaced by Form No. 140. Form 27Q (TDS return for non-residents) is replaced by Form No. 144. Form 27EQ (TCS return) is replaced by Form No. 143. All these changes are prescribed under Rule 219 of the Draft Income Tax Rules 2026.
The function of Form 15G and Form 15H (declarations for no TDS deduction by residents) continues under the new Act, but the form is now called Form No. 121 under Rule 211 of the Draft Income Tax Rules 2026. The legal basis is Section 393(6) of the Income Tax Act 2025. The procedure — furnishing a declaration to the deductor who then allots a unique identification number — remains the same.
Section 195 of the Income Tax Act 1961 is replaced by Section 393(2) Table Sl. No. 17 of the Income Tax Act 2025. The key principle — that the obligation to deduct TDS extends to all persons, resident or non-resident, regardless of whether the payee has any presence in India — is explicitly preserved. The rate remains "rates in force" (typically rates under the applicable tax treaty or Finance Act rates, whichever is lower).
Our direct tax team at Shahi & Co. is assisting businesses of all sizes — employers, corporates, LLPs, and individuals — with the transition from the 1961 Act framework to the new Income Tax Act 2025 TDS structure. We cover contract reviews, payroll system updates, quarterly return migrations, and lower-TDS certificate applications. Reach out for a confidential discussion.
Our Direct Tax practice at Shahi & Co. assists businesses across New Delhi and Pan-India with TDS compliance, payroll tax, advance tax, and all aspects of the Act 2025 transition.
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