The Income Tax Act, 2025 has consolidated all TDS provisions from the old Sections 192 to 194T into two consolidated sections: Section 392 and Section 393. This is a critical change for deductors, as using old section codes for transactions from April 1, 2026 onwards will result in return filing errors.
The Critical TDS Change — Sections Consolidated
The Income Tax Act, 2025 has brought about a fundamental restructuring of TDS provisions. All individual TDS sections of the Income Tax Act, 1961 — spanning Sections 192 through 194T — have been consolidated into two master sections:
- Section 392: TDS on Salaries
- Section 393: TDS on all other specified payments (tabular format)
- Section 394: Tax Collected at Source (TCS) — all TCS provisions consolidated
This consolidation is effective from 1 April 2026. Any payment made or credit given on or after April 1, 2026 must reference the new section numbers in TDS returns, challans, and certificates. Using old section numbers (e.g., 194C, 194J, 194H) for transactions from April 1, 2026 onwards will cause system-level validation errors in TDS returns.
Governing Law — The Transition Rule
| Transaction Date | Governing Act | Section Reference |
|---|---|---|
| Payment/credit on or before 31 March 2026 | Income Tax Act, 1961 | Old 194C, 194J, 194H, etc. |
| Payment/credit on or after 1 April 2026 | Income Tax Act, 2025 | Section 392, 393(1), 394 |
Section 392 — TDS on Salaries
Section 392 of the Income Tax Act, 2025 governs TDS on salaries paid to employees. The provisions are substantively identical to old Section 192 of the 1961 Act. Every employer responsible for paying salary must deduct TDS at the average rate of income tax computed on the estimated income for the Tax Year. Form 16 continues to be issued by employers for salary TDS.
Section 393 — TDS on Other Specified Payments
Section 393 presents TDS on non-salary payments in a consolidated tabular format. Key entries:
| Section 393 Entry | Nature of Payment (Old Section) | Threshold | Rate |
|---|---|---|---|
| Sl. 1 | Interest on Securities (old Sec. 193) | ₹10,000 | 10% |
| Sl. 2 | Dividends (old Sec. 194) | ₹5,000 | 10% |
| Sl. 3 | Interest other than securities (old Sec. 194A) | ₹50,000 (Sr. Citizen); ₹40,000 (Others) | 10% |
| Sl. 4 | Winning from lotteries/puzzles (old Sec. 194B) | ₹10,000 | 30% |
| Sl. 6(i) | Contractor payments (old Sec. 194C) | ₹30,000 / ₹1L aggregate | 1% / 2% |
| Sl. 11 | Commission/Brokerage (old Sec. 194H) | ₹20,000 | 2% |
| Sl. 12(i) | Rent — Land/Building (old Sec. 194-I) | ₹2.4L p.a. | 10% |
| Sl. 14 | Professional/Technical fees (old Sec. 194J) | ₹30,000 | 10% / 2% |
| Sl. 20 | Partner’s salary/interest (old Sec. 194T) | ₹20,000 | 10% |
Immediate Action Required for Deductors
- Update ERP / Payroll Systems: All accounting and payroll software must be updated to reference Section 392 or Section 393 table entries instead of old 194-series section codes for transactions from April 1, 2026.
- Update Challans: TDS deposit challans must carry the new section references.
- File Q1 TDS Returns for Tax Year 2026-27: The first quarterly TDS return for April–June 2026 must cite Section 393(1) entries for non-salary payments.
- Issue Correct TDS Certificates: Form 16 (for salary under Section 392) and Form 16A (for non-salary under Section 393).
TDS Return Due Dates — Tax Year 2026-27
| Quarter | Period | Due Date |
|---|---|---|
| Q1 (TY 2026-27) | April – June 2026 | 31 July 2026 |
| Q2 (TY 2026-27) | July – September 2026 | 31 October 2026 |
| Q3 (TY 2026-27) | October – December 2026 | 31 January 2027 |
| Q4 (TY 2026-27) | January – March 2027 | 31 May 2027 |
The information provided herein is for general guidance and informational purposes only. For advice tailored to your specific situation, please consult a qualified Chartered Accountant.
The information provided herein is for general guidance and informational purposes only. For advice tailored to your specific situation, please consult a qualified Chartered Accountant.