CA Piyush KhetanDisclaimer: This article is for general informational purposes only and does not constitute professional tax or legal advice. TDS provisions involve specific conditions based on residency, PAN status, and transaction type. Always verify with a Chartered Accountant before deducting or remitting tax. Contact us for advice specific to your situation.
If you or your finance team files TDS returns, reconciles Form 26AS, or issues Form 16 and 16A, you need to read this. Effective 1 April 2026, the Income Tax Act 2025 came into force, replacing the Income Tax Act 1961 that had governed Indian taxation for over six decades. The rates have not changed. The thresholds have not changed. But every single section number has.
Section 192 is now 392. Section 194C is now 393(1). Section 194J is now 393(1). Section 194T, the partner salary TDS provision introduced last year, is now 393(3). If your TDS return software, chartered accountant, or payroll system is still using old section codes in 2026-27 return filings, the returns will be filed incorrectly.
Key fact: This is not a minor circular or an amendment. The Income Tax Act 2025 is a full recodification of the 1961 Act. The structure, section numbering, and table-based format are entirely new. Old section numbers remain relevant as reference points but the new section references are what appear in returns from Tax Year 2026-27 onwards.
Why the Entire Act Was Rewritten
The Income Tax Act 1961 had been amended over 10,000 times in 65 years. Sections had sub-sections, provisos to provisos, and cross-references that made even experienced CAs spend hours tracing a single provision. The 2025 recodification was not about policy change. It was about clarity, structure, and accessibility. The new Act uses numbered tables within sections, plain language, and a logical grouping that makes the law easier to read and apply.
For TDS specifically, the old Act had dozens of standalone sections scattered between 192 and 206CC. The new Act consolidates them into sections 392, 393, and 394, with each payment type listed in a numbered table. So instead of “Section 194J(b)”, the new reference is “Section 393(1) [Table: Sl. No. 6(iii).D(b)]”. More precise, but different.
What Has Changed and What Has Not
To be clear about what this means practically:
- TDS rates: Unchanged. 10% on professional fees is still 10%. 2% on contract work for others is still 2%.
- Thresholds: Unchanged. ₹50,000 for professional fees. ₹30,000 per contract for 194C payments. ₹20,000 for partner salary under 194T.
- Section numbers in return filings: Changed. Your software must be updated to reflect the new section codes for Tax Year 2026-27 returns.
- Codes to be used in returns: Unchanged. The 4-digit codes (1001, 1023, 1026, 1067, etc.) used in Form 26Q and Form 27Q remain the same.
- Form numbers: Unchanged. Form 26Q, 27Q, 24Q, 16, 16A all continue as before.
Important for 194T (Partner Salary TDS): Section 194T introduced effective 1 April 2025 is now renumbered to Section 393(3) [Sl. No. 7] under the IT Act 2025. If your firm started deducting TDS on partner salary last year under 194T, the new filing reference for Tax Year 2026-27 is 393(3). The rate (10%) and threshold (₹20,000 per partner per year) are unchanged.
The Complete TDS Old vs New Section Mapping
Below is a reference summary of the most commonly used TDS sections and their new equivalents. For the complete rate chart including all domestic TDS, foreign TDS, and TCS entries with thresholds and return codes, download the PDF we have compiled.
| Nature of Payment | Old Section | New Section (IT Act 2025) |
Rate | Threshold |
|---|---|---|---|---|
| Salary & Employment | ||||
| Salary | 192 | 392 | Slab rate | — |
| EPF accumulated balance payment | 192A | 392(7) | 10% | — |
| Interest | ||||
| Interest on securities | 193 | 393(1) [Sl. 5(i)] | 10% | ₹10,000 |
| Interest other than on securities (non-senior citizen) | 194A | 393(1) [Sl. 5(ii).D(b)] | 10% | ₹50,000 |
| Interest other than on securities (senior citizen) | 194A | 393(1) [Sl. 5(ii).D(a)] | 10% | ₹1,00,000 |
| Contracts & Professional Services | ||||
| Contract work (Individual / HUF contractor) | 194C | 393(1) [Sl. 6(i).D(a)] | 1% / 2% | ₹30,000 / ₹1,00,000 |
| Fees for technical services / royalty for films | 194J(a) | 393(1) [Sl. 6(iii).D(a)] | 2% | ₹50,000 |
| Fees for professional services | 194J(b) | 393(1) [Sl. 6(iii).D(b)] | 10% | ₹50,000 |
| Rent & Property | ||||
| Rent on machinery / equipment | 194I(a) | 393(1) [Sl. 2(ii).D(a)] | 2% | ₹50,000/month |
| Rent other than machinery | 194I(b) | 393(1) [Sl. 2(ii).D(b)] | 10% | ₹50,000/month |
| Partner & Firm | ||||
| Salary / remuneration / commission / bonus / interest to partner of firm 194T | 194T | 393(3) [Sl. 7] | 10% | ₹20,000 |
| Dividends & Commission | ||||
| Dividends (incl. preference shares) — resident individual | 194 | 393(1) [Sl. 7] | 10% | ₹10,000 |
| Commission or brokerage (other than insurance) | 194H | 393(1) [Sl. 1(ii)] | 2% | ₹20,000 |
| Purchase of goods | 194Q | 393(1) [Sl. 8(ii)] | 0.1% | Excess of ₹50 Lakh |
This table covers the most commonly used sections. For all 75+ entries including foreign TDS and TCS, download the complete rate chart below.
What Your Business Needs to Do Right Now
The impact differs based on who you are. Here is a practical breakdown.
If you file TDS returns yourself
Update your TDS software
TRACES-compatible software (TDSMAN, Saral TDS, Winman, etc.) should have already released updates for Tax Year 2026-27. Check that your software version reflects the new section numbers before filing your first quarterly return for Q1 FY 2026-27.
Check the codes you enter in returns
The 4-digit codes (1001, 1023, 1026, etc.) in Form 26Q and Form 27Q remain the same. These have not changed. Only the section number field inside the return changes to reflect the new Act numbering.
Verify Form 16 and 16A templates
If you generate Form 16 or 16A from your own system rather than downloading from TRACES, check that your templates reference the correct new section numbers. TRACES-generated certificates will auto-update.
If your CA handles TDS for you
Ask your CA to confirm that their filing software is updated for Tax Year 2026-27 and that any returns filed from April 2026 onwards reference the new IT Act 2025 section numbers. If your TDS certificates look identical to last year with the same section references, that is a red flag worth checking.
If you are on Zoho Payroll or Zoho Books
Zoho typically releases compliance updates to align with regulatory changes. Check your Zoho account for any TDS-related compliance announcements for Tax Year 2026-27. If you are a Khetan Agrawal client and uncertain, contact us directly and we will verify your setup.
The No-PAN Rule Still Applies
Section 206AA of the old Act — which mandated higher TDS rates when the deductee fails to provide a valid PAN — is now Section 397(2) under the IT Act 2025. The rule itself is unchanged: if the payee does not provide PAN, TDS is deducted at the higher of the applicable rate, the rate in force, or 20% (5% for Sections 393(1) [Sl. 8(ii)] and [Sl. 8(v)]). Make sure your payee database is complete before the first payment of the year.
A Note on 194T — Partner Salary TDS
Section 194T was introduced with effect from 1 April 2025. It mandates TDS at 10% on salary, remuneration, commission, bonus, or interest paid to a partner of a firm, including amounts credited to the partner's capital account, if the aggregate exceeds ₹20,000 in a financial year. This applies to every firm — CA firms, law firms, medical partnerships, trading firms.
Under the IT Act 2025, this provision is now Section 393(3) [Table: Sl. No. 7]. The rate, threshold, and coverage are unchanged. If your firm began deducting 194T TDS in FY 2025-26, the Q1 2026-27 return should reference 393(3) instead of 194T. We will cover 194T in a dedicated post shortly — covering compliance, Zoho Books configuration, and the common mistakes firms are making.
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