Quick answer: Under the Income-tax Act, 2025, TDS on salary sits under Section 392, all other TDS under Section 393, and TCS under Section 394. Most TDS rates and thresholds are the same as FY 2025-26. The real rate changes are on TCS: liquor, scrap, minerals, tendu leaves, overseas remittances for education and medical, and overseas tour packages.
392TDS on salary
393All other TDS
394TCS (old 206C)
1 Apr 2026Act in force
In this guide
The Income-tax Act, 2025 replaces the 1961 Act from 1 April 2026. For TDS and TCS, the biggest change is how you quote them: new section numbers, new forms and new payment codes. This guide shows the 2025 Act and 1961 Act side by side so you can map old sections to new ones.
1961 Act vs 2025 Act: what changed
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| Topic | Income-tax Act, 1961 | Income-tax Act, 2025 (from 1 Apr 2026) |
|---|---|---|
| Time period | Previous Year / Assessment Year | One “Tax Year” (TY 2026-27) |
| TDS on salary | Section 192, 192A | Section 392 |
| TDS on other payments | Sections 193 to 194S, 195, 196 series | Section 393 (tables for residents, non-residents and any person) |
| TCS | Section 206C | Section 394 |
| Returns and certificates | Form 24Q / 26Q, Form 16, 16A | Form 138 / 140, Form 130, 131 (per published guides) |
| Quoting sections | 194C, 194J, etc. | Section 393 table item and the new payment code |
TDS rate chart for Tax Year 2026-27 (resident payments)
Rates exclude surcharge (where applicable) and 4% cess. The last column compares with the 1961 Act as it stood in FY 2025-26. Items marked “other guides” are not in the TDSMAN chart, which covers TAN-holding deductors.
Shaded row rate or threshold changed at some point since FY 2024-25 Plain row no change
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| Nature of payment | Old section | New section | Rate | Threshold | Versus 1961 Act (FY 2025-26) |
|---|---|---|---|---|---|
| Salary | 192 | 392 | Slab rates | Basic exemption | No change in rates |
| Premature PF withdrawal | 192A | 392(7) | 10% | ₹50,000 | No change |
| Interest on securities | 193 | 393 | 10% | ₹10,000 | No change |
| Dividend (company) | 194 | 393 | 10% | ₹10,000 | No change. ₹10,000 applies to individual shareholders |
| Interest (bank / post office / other) | 194A | 393 | 10% | ₹1 lakh senior citizens; ₹50,000 others at banks; ₹10,000 other payers | No change from FY 2025-26. Raised by Finance Act 2025 (was ₹50,000 / ₹40,000 / ₹5,000) |
| Lottery, crossword winnings | 194B | 393 | 30% | ₹10,000 per transaction | No change |
| Online game winnings | 194BA | 393 | 30% | None (net winnings) | No change |
| Horse race winnings | 194BB | 393 | 30% | ₹10,000 | No change |
| Contractors | 194C | 393 | 1% individual/HUF; 2% others | ₹30,000 single; ₹1 lakh yearly | Rates same. Manpower supply is now expressly “work” |
| Insurance commission | 194D | 393(1) | 2% individual; 10% others | ₹20,000 | Threshold raised from ₹15,000 by FA 2025 |
| Life insurance maturity (taxable part) | 194DA | 393 | 2% on income part | ₹1 lakh | No change (cut from 5% in Oct 2024) |
| Lottery ticket commission | 194G | 393 | 2% | ₹20,000 | No change (FA 2025 / 2024 amendments) |
| Commission, brokerage | 194H | 393(1) | 2% | ₹20,000 | No change from FY 2025-26 (was 5% / ₹15,000 before) |
| Rent: plant, machinery | 194I(a) | 393(1) | 2% | ₹50,000 per month | Same as ₹6 lakh a year; now stated monthly |
| Rent: land, building, furniture | 194I(b) | 393(1) | 10% | ₹50,000 per month | Same as ₹6 lakh a year |
| Buying immovable property | 194IA | 393 | 1% | ₹50 lakh | Other guides. Buyer uses PAN instead of TAN when seller is non-resident |
| Rent by individual/HUF (no audit) | 194IB | 393 | 2% | ₹50,000 per month | Other guides. No change (cut from 5% in Oct 2024) |
| Professional fees; technical, call-centre, royalty | 194J | 393 | 10%; 2% | ₹50,000 | No change (threshold raised from ₹30,000 by FA 2025) |
| Director’s fees | 194J | 393 | 10% | None | No change |
| Mutual fund income | 194K | 393 | 10% | ₹10,000 | No change (raised from ₹5,000 by FA 2025) |
| Compulsory land acquisition | 194LA | 393 | 10% | ₹5 lakh | No change (raised from ₹2.5 lakh by FA 2025) |
| Joint development agreement (not in kind) | 194IC | 393(1) | 10% | None | No change |
| NSS payments (80CCA) | 194EE | 393(3) | 10% | ₹2,500 | No change |
| REIT / InvIT, investment fund income | 194LBA, 194LBB | 393 | 10% (resident) | Nil | No change |
| Securitisation trust income | 194LBC | 393 | 10% (resident) | Nil | Aligned to 10% by FA 2025 (was 25% / 30%) |
| Contract, commission, fees (individual/HUF) | 194M | 393 | 2% | ₹50 lakh yearly | Other guides. No change (cut from 5% in Oct 2024) |
| Cash withdrawal | 194N | 393 | 2% | ₹1 crore (₹3 crore co-op) | Higher rate for non-filers (206AB) no longer applies |
| E-commerce operator to seller | 194O | 393 | 0.1% | ₹5 lakh (individual/HUF sellers) | No change from FY 2025-26 (cut from 1% in Oct 2024) |
| Senior citizens 75+ (bank) | 194P | 393 | Slab rates | As per slab | No change |
| Purchase of goods (buyer) | 194Q | 393 | 0.1% | ₹50 lakh yearly (buyer turnover above ₹10 crore in preceding year) | No change |
| Business benefits or perquisites | 194R | 393 | 10% | ₹20,000 | No change; CBDT guidelines now binding |
| Virtual digital assets | 194S | 393 | 1% | ₹10,000 (specified-person cases may differ) | No change |
| Partner remuneration, interest (firm/LLP) | 194T | 393 | 10% | ₹20,000 | Not new in 2025 Act: introduced from 1 Apr 2025 under the 1961 Act |
TDS and TCS when PAN is not furnished
Under Section 397(2) (old 206AA), TDS applies at the higher of the specified rate, the rate in force, or 20%. For 194Q and 194O the rate is 5%. For TCS (old 206CC) it is twice the rate or 5%, capped at 20%. The higher rates for non-filers (206AB / 206CCA) no longer apply.
TDS on payments to non-residents: Section 393(2)
Add surcharge and 4% cess. Treaty (DTAA) rates may be lower.
| Nature of payment | Old section | Rate |
|---|---|---|
| Non-resident sportspersons, entertainers | 194E | 20% |
| Foreign-currency borrowing interest (bonds before 1 Jul 2023) | 194LC | 5% |
| Rupee-denominated bond interest (before 1 Jul 2023) | 194LD | 5% |
| IFSC-listed bond interest: issued before / on or after 1 Jul 2023 | 194LC | 4% / 9% |
| Infrastructure debt fund interest | 194LB | 5% |
| Business trust: interest / rental income | 194LBA | 5% / 10% |
| Investment fund or securitisation trust income | 194LBB, 194LBC | 10% resident; 35% non-resident company; 30% other non-residents |
| Mutual fund / specified company units | 196A | 20% or treaty rate if lower |
| Units (income / LTCG) | 196B | 10% / 12.5% |
| Bonds, GDRs (income / LTCG) | 196C | 10% / 12.5% |
| FPI securities income | 196D | 20% / 10% (by category) |
| Any other sum, such as technical services | 195 | Rate as applicable (code 1057), or treaty rate |
TCS rate chart: Section 394 (old Section 206C)
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| Nature of collection | Old section | New section | TCS rate TY 2026-27 | Threshold | Versus FY 2025-26 |
|---|---|---|---|---|---|
| Alcoholic liquor, scrap, coal / lignite / iron ore | 206C(1) | 394 | 2% | None | Raised from 1% |
| Tendu leaves | 206C(1) | 394 | 2% | None | Cut from 5% |
| Timber, other forest produce | 206C(1) | 394 | 2% | None | Cut from 2.5% |
| Parking lot, toll plaza, mining | 206C(1C) | 394 | 2% | None | No change |
| Motor vehicle above ₹10 lakh | 206C(1F) | 394 | 1% | ₹10 lakh per vehicle | No change |
| LRS: education (self-funded) and medical | 206C(1G) | 394 | 2% | Above ₹10 lakh a year | Cut from 5% |
| LRS: education funded by a specified financial institution loan | 206C(1G) | 394 | Nil | n/a | Other guides. Was 0.5% above ₹10 lakh before FA 2025 |
| LRS: other purposes (investment, gifts, travel forex) | 206C(1G) | 394 | 20% | Above ₹10 lakh a year | No change |
| Overseas tour package | 206C(1G) | 394 | 2% flat | None | Was 5% up to ₹10 lakh, 20% above |
| Luxury goods: watches, art, collectibles, yachts, sunglasses, handbags, shoes, sportswear, home theatre, horses | 206C(1F) | 394 | 1% | Above ₹10 lakh per item (other guides) | No change |
| Sale of goods above ₹50 lakh (seller) | 206C(1H) | Not applicable | Nil | n/a | Removed from 1 Apr 2025 by FA 2025; buyer TDS under 194Q remains |
Key takeaways
- Same rates, new language. Quote Section 392, 393 or 394 table items and the new payment codes on challans and returns. Old section numbers fail validation in TDS software.
- Older cuts, not new ones. Cuts to 194H, 194IB, 194M, 194DA and 194O came in October 2024, and threshold increases came with Finance Act 2025.
- Reporting by code. Examples: 1035 for 194O, 1006 for 194H, 1023 / 1024 for 194C, 1026 / 1027 for 194J, 1031 for 194Q, 1086 to 1089 for LRS and tour packages. A challan is no longer tied to a section, so one challan can cover several codes.
- Small transporters. Section 393(4) keeps the no-deduction rule for transporters owning up to 10 goods carriages (PAN and declaration needed) and for personal-use contracts by individuals/HUF.
- Real new TCS changes. Tour packages, LRS for education and medical, liquor, scrap, minerals and tendu leaves changed from 1 April 2026.
- Housekeeping. Update ERP and payroll for Form 130 / 131, check manpower contracts for 194C, and note that MACT interest paid to individuals is not subject to TDS.
TDS and TCS for Amazon and Flipkart sellers
If you sell on Amazon, Flipkart or Meesho, the operator deducts 0.1% under old Section 194O (now Section 393). Match it with your Form 26AS/AIS each quarter and reconcile it with TCS credited under GST. See our accounting services for Amazon and Flipkart sellers.
FAQs
Do I quote Section 194C or Section 393 now?
For payments from 1 April 2026, quote Section 393 with the relevant table item. Old section numbers apply only to earlier periods.
Did the Income-tax Act 2025 change TDS rates?
Mostly no. It reorganised sections. The notable rate changes since FY 2024-25 came from Finance Acts, and the TCS changes came from Finance Act 2026.
Which section covers TCS under the new Act?
Section 394 replaces Section 206C.
Is Form 16 still used?
For Tax Year 2026-27, published guides say the salary TDS certificate becomes Form 130.
Need help moving your TDS/TCS compliance to the new Act?
Write to contact@metaccounts.in for a free 15-minute call.
Write to contact@metaccounts.in for a free 15-minute call.
Source: Official information is on incometaxindia.gov.in. This post is for general information and is not tax advice. Verify against Sections 392 to 394 and consult your CA before acting.