TDS under the Income-tax Act, 2025: the new map, with the payment codes
Where each old TDS section now sits in the new Act, with the four-digit payment code, rate and threshold of each line.
The Income-tax Act, 2025 takes effect from 1 April 2026. Tax rates and most thresholds look familiar. What has changed is the way the rules are written and the way a payment is named on the return: the old section letters give way to a table, and the table gives way to a four-digit payment code. This note sets out the new map, with the old section beside each new reference, so that a payee master, a challan and a return can be re-pointed in one sitting.
Everything in the two tables below was taken from the section 393 table and the payment-code list that Corelytix keeps for Form 140. Where we could not confirm a point from those, it is not here.
One chapter, two sections, three tables
Chapter XIX replaces the old chapter on deduction of tax at source. Section 392 deals with salary (including the accumulated balance due to an employee, section 392(7)). Section 393 deals with every other payment, in three tables: 393(1) for payments to residents, 393(2) for payments to non-residents, and 393(3) for payments to any person. Section 394 is the new home of tax collected at source.
The practical effect is that a dispute over which section applies (the familiar 194C against 194J argument) becomes a question of which line of Table 393(1) the payment falls on, and then which payment code that line carries.
What changed, side by side
| Income-tax Act, 1961 | Income-tax Act, 2025 | |
|---|---|---|
| Where the rules sit | Chapter XVII: over thirty sections (192 to 196D, 194C, 194J ...) | Chapter XIX: section 392 (salary) and section 393 (everything else, in three tables) |
| Payments to residents / non-residents / any person | Separate sections, with section 195 for non-residents | Section 393(1) residents; 393(2) non-residents; 393(3) payments to any person (winnings, cash withdrawals, partner payments) |
| Tax collected at source (TCS) | Section 206C | Section 394 |
| How a payment is named on the return | By section: 194C, 194J, 194I ... | By a four-digit payment code, taken from the code list of the return form |
| Period | Previous year and assessment year | One tax year |
| Salary statement | Form 24Q | Form 138 |
| Resident (non-salary) statement | Form 26Q | Form 140 |
| Non-resident statement | Form 27Q | Form 144 |
| TCS statement | Form 27EQ | Form 143 |
| Tax audit report | Form 3CA / 3CB with Form 3CD | Form 26 (see our clause map) |
Payment, section and code
The table lists the payments a business meets most often. The "old section" column is for finding your way; the return uses the payment code. Two lines carry more than one code because the code depends on the payee: a contractor who is an individual or a HUF has code 1023 and any other contractor 1024; bank interest to a senior citizen is 1020 and to anyone else 1021. A payee master therefore needs the payee's constitution, and for bank interest the senior-citizen flag, not just a PAN.
| Payment | Old section | Section 393 reference | Payment code | Rate | Threshold |
|---|---|---|---|---|---|
| Commission or brokerage (not insurance) | 194H | 393(1) Table Sl. 1(ii) | 1006 | 2% | ₹20,000 |
| Insurance commission | 194D | 393(1) Table Sl. 1(i) | 1005 | Rates in force | ₹20,000 |
| Rent: land, building, furniture and fittings | 194I(b) | 393(1) Table Sl. 2(ii) | 1009 | 10% | ₹50,000 for a month or part of a month |
| Rent: plant, machinery or equipment | 194I(a) | 393(1) Table Sl. 2(ii) | 1008 | 2% | ₹50,000 for a month or part of a month |
| Contractor, individual or HUF | 194C | 393(1) Table Sl. 6(i) | 1023 | 1% | ₹30,000 a single sum; ₹1,00,000 in the year |
| Contractor, any other person | 194C | 393(1) Table Sl. 6(i) | 1024 | 2% | ₹30,000 a single sum; ₹1,00,000 in the year |
| Fees for professional services; director's fees (non-salary) | 194J | 393(1) Table Sl. 6(iii) | 1027 (1028 director) | 10% | ₹50,000 (director's remuneration: nil) |
| Fees for technical services; royalty on films; call-centre | 194J | 393(1) Table Sl. 6(iii) | 1026 | 2% | ₹50,000 |
| Interest other than on securities, by a bank (senior citizen / others) | 194A | 393(1) Table Sl. 5(ii) | 1020 / 1021 | Rates in force | ₹1,00,000 senior citizen; ₹50,000 others |
| Interest other than on securities, by others | 194A | 393(1) Table Sl. 5(iii) | 1022 | Rates in force | ₹10,000 |
| Purchase of goods | 194Q | 393(1) Table Sl. 8(ii) | 1031 | 0.1% | ₹50 lakh (tax on the excess) |
| Sale through an e-commerce operator | 194-O | 393(1) Table Sl. 8(v) | 1035 | 0.1% of the gross amount | Nil (small individual sellers: see section 393(4)) |
| Transfer of a virtual digital asset | 194S | 393(1) Table Sl. 8(vi) | 1037 / 1038 | 1% | Nil (small amounts: see section 393(4)) |
| Dividend | 194 | 393(1) Table Sl. 7 | 1029 | 10% | Nil (individual paid other than in cash: see 393(4)) |
| Winnings from lottery, crossword, card game, betting | 194B | 393(3) Table Sl. 1 | 1058 / 1059 | Rates in force | ₹10,000 for a single transaction |
| Salary | 192 | Section 392(1) | (salary return) | Average rate on estimated income | As per slabs and regime |
Three points that are easy to miss
1. E-commerce has no threshold
The new table puts tax on sales through an e-commerce operator at 0.1% of the gross amount with no money threshold; the only relief is for small individual sellers, in section 393(4). Notes that quote a ₹5 lakh threshold for this line are not reading the table.
2. Purchases of goods: exactly ₹50 lakh is not enough
Tax on a purchase of goods is deducted at 0.1% on the amount by which the payments exceed ₹50 lakh. A vendor paid exactly ₹50,00,000 in the year has no tax deducted; one paid ₹50,10,000 has tax on ₹10,000. Always read the threshold column of the line, because not every line is worded the same way.
3. Bank interest thresholds are ₹50,000 and ₹1,00,000
For interest other than on securities paid by a bank, co-operative bank or post office, the table gives ₹1,00,000 for a senior citizen and ₹50,000 for others. Older limits of ₹40,000 and ₹50,000 still circulate; they are out of date.
A payment that crosses 1 April 2026
Tax at source has long been deducted at the earlier of the credit to the payee's account and the payment. Where an invoice is credited before 1 April 2026 and paid after it, or an advance is paid before and the invoice is credited after, the transitional provisions of the new Act decide which law and which form apply. We have not worked every boundary case and do not offer a rule of thumb here: read the saving provisions, decide each case, and keep the working on the file. Do not mix the two laws in one return.
Late deduction, late deposit, late return
Interest for late deduction and late deposit is carried over from the old law, now in section 398(3): 1% for each month or part of a month from the date the tax should have been deducted to the date it was, and 1.5% for each month or part of a month from the date of deduction to the date of deposit. A statement filed late carries a fee of ₹200 a day under section 427 (it was section 234E), which cannot exceed the tax the statement shows. In Form 26 the interest is asked in clause 50(c) and the disallowance for a default in clause 51(a).
What to do now
- Add the payment code to every ledger or payee that attracts tax at source, using the table above as the starting point.
- Record the payee's constitution (individual or HUF, or other) for contractors, and the senior-citizen flag for bank interest.
- Keep two working papers for the year of change: transactions governed by the old law and by the new one.
- Switch from Forms 24Q, 26Q, 27Q and 27EQ to Forms 138, 140, 144 and 143 for the new tax year.
- Before you sign a tax audit report for tax year 2026-27, read clause 50 and clause 51 of Form 26 against your working.
Rates, thresholds and codes are as kept in Corelytix on 20 October 2026, from the section 393 table and the Form 140 payment-code list. The law and the code list can be amended; check the current notified text before relying on a line for a return you sign.