TDS Changes Under New Income Tax Act 2025: Complete Guide
- Every TDS section renumbered. Rates and rules unchanged.
- Section 192 (TDS on salary) is now Section 392.
- Sections 194A to 194J consolidated under Section 393. Same triggers and rates.
- Section 195 (TDS on payments to non-residents) is now Section 400. DTAA benefits preserved.
Tax Deducted at Source (TDS) is a core compliance obligation for employers, businesses, and professionals. Under the Income Tax Act 2025 (effective April 1, 2026), every TDS section number has changed. The good news: rates, thresholds, and compliance rules remain the same. Here is the complete section-by-section mapping.
TDS Section Mapping: Old to New
Section 192 (TDS on Salary) is now Section 392
- What it covers: Every employer paying salary must deduct TDS based on the employee's estimated annual income and chosen tax regime
- Rate: As per applicable slab rates
- What changes: Only the section number. The obligation, calculation method, and Form 16 requirements remain identical
- Key note: Employers must continue offering employees the choice between old and new regime at the start of the year
Section 194A (TDS on Interest) is now part of Sections 393/400
- What it covers: Banks and financial institutions deduct TDS on interest payments (FDs, RDs) exceeding Rs 40,000 per year (Rs 50,000 for senior citizens)
- Rate: 10%
- What changes: Section 194A has been consolidated with other TDS provisions. The specific rates and Form 15G/15H rules remain unchanged
Section 194C (TDS on Contractors) is now part of Section 393
- What it covers: TDS on payments to contractors and sub-contractors
- Rate: 1% for individuals/HUFs, 2% for others
- Threshold: Rs 30,000 per transaction or Rs 1,00,000 aggregate per year
- What changes: Section number only. Rates and thresholds remain the same
Section 194H (TDS on Commission) is now part of Section 393
- What it covers: TDS on commission or brokerage payments
- Rate: 5%
- Threshold: Rs 15,000 per year
- What changes: Section number only
Section 194I (TDS on Rent) is now part of Section 393
- What it covers: TDS on rent payments
- Rate: 2% for plant and machinery, 10% for land and building
- Threshold: Rs 2,40,000 per year
- What changes: Section number only. The distinction between plant/machinery and land/building rates continues
Section 194J (TDS on Professional Fees) is now part of Section 393
- What it covers: TDS on fees for professional or technical services
- Rate: 10% (2% for certain technical services)
- Threshold: Rs 30,000 per year
- What changes: Section number only. Both the 10% and 2% rates continue
Section 195 (TDS on NRI Payments) is now part of Section 400
- What it covers: TDS on any payment to a non-resident (other than salary)
- Rate: Depends on nature of payment and applicable DTAA
- What changes: The non-resident TDS provisions have been reorganised for clarity. Compliance requirements, DTAA application, and certificate procedures (Section 197 is now in Section 400) remain unchanged
Section 206C (TCS) is now part of Section 400
- What it covers: Tax Collection at Source on specified transactions (foreign remittances, sale of goods above Rs 50 lakh, etc.)
- What changes: Consolidated with other deduction/collection provisions under Section 400
Quick Reference Table
Compliance Checklist for April 2026
Here is what you need to update when the new act takes effect:
- TDS challans: Reference new section numbers when depositing TDS with the government
- TDS returns (Form 24Q, 26Q, 27Q): Use updated section numbers. Your TDS software will release an update.
- Form 16 and Form 16A: Will reference new section numbers for FY 2026-27 onwards
- Contracts and agreements: Update section number references in new contracts
- Accounting entries: Update TDS ledger codes if they reference section numbers
- Tally/Zoho/QuickBooks: Ensure your accounting software is updated with the new section mapping
Common Mistakes to Avoid
Causes mismatches in TDS returns and delays refund processing for the payee.
Tally, Zoho, or QuickBooks without the updated section mapping generates incorrect returns.
TDS deducted before April 1, 2026 under old section numbers stays valid. Transition provisions handle the overlap.
If you collect tax at source under old Section 206C, switch to Section 400 references from April 1.
Frequently Asked Questions
What is the new section for TDS on salary?
Section 192 (TDS on salary) is now Section 392 under the Income Tax Act 2025. The rates and calculation method remain exactly the same.
Have TDS rates changed under the new act?
No. All TDS rates remain the same. Only the section numbers have changed. Section 194C (contractors) at 1%/2%, Section 194J (professionals) at 10%, etc., all rates are unchanged.
What is the new section for TDS on rent?
Section 194I (TDS on rent) is now part of Section 393. The rates remain 2% for plant/machinery and 10% for land/building, with the Rs 2.4 lakh threshold unchanged.
Do I need to update my TDS software?
Yes. From April 2026, TDS challans and returns must reference the new section numbers. Most software providers (Tally, Zoho) will release updates automatically.
For property-purchase TDS specifically (1% above Rs 50L), see Section 194-IA now Section 393. For TCS on foreign remittance (LRS), see Section 206C now Section 394.
Disclaimer: This article provides general information about the Income Tax Act 2025 and is not tax advice. Consult a qualified Chartered Accountant for advice specific to your situation.
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