The enactment of the Income Tax Act, 2025 (which replaces the six-decade old 1961 Act starting April 1, 2026) has drastically simplified the TDS framework.
Instead of juggling more than 60 separate sections (from 192 to 194T), the 2025 Act consolidates almost everything into just three parent sections. While the rates and monetary
thresholds remain mostly aligned with the previous tax structure (preserving continuity), the section numbering has completely changed.
The New 3-Section TDS/TCS Framework
| New Section (ITA 2025) | Scope & Coverage | Old Equivalent (ITA 1961) |
| Section 392 | TDS on Salary payments | Section 192 |
| Section 393 | TDS on All Non-Salary payments (Residents & Non-Residents) | Sections 193 to 194T & 195 |
| Section 394 | Tax Collected at Source (TCS) provisions | Section 206C |
2025 Act TDS Rate & Limit Chart (Major Sub-Clauses)
Because all domestic, non-salary payments are packed into Section 393(1), compliance now relies on specific Entry/Serial Numbers within that section's master table.
Below are the updated section references along with their prevailing limits and rates:
| Payment Type | New Reference (ITA 2025) | Old Sec. | Threshold Limit | TDS Rate |
| Salary | Sec. 392(1) | 192 | As per normal slab limits | Slab Rates |
| Contractor / Subcontractor (Includes Manpower) | Sec. 393(1) [Table: Sl. No. 6(i)] | 194C | ₹30,000 (Single) / ₹1,00,000 (Aggregate) | 1% (Indv/HUF) 2% (Others) |
| Professional Fees | Sec. 393(1) [Table: Sl. No. 11] | 194J(b) | ₹ 50,000 | 10% |
| Technical Fees / Royalty | Sec. 393(1) [Table: Sl. No. 11] | 194J(a) | ₹ 50,000 | 2% |
| Commission / Brokerage | Sec. 393(1) [Table: Sl. No. 1(ii)] | 194H | ₹ 20,000 | 2% |
| Rent (Land & Building) | Sec. 393(1) [Table: Sl. No. 10] | 194I(b) | ₹50,000 per month / ₹6,00,000 annually | 10% |
| Rent (Plant & Machinery) | Sec. 393(1) [Table: Sl. No. 10] | 194I(a) | ₹50,000 per month / ₹6,00,000 annually | 2% |
| Interest on Securities | Sec. 393(1) [Table: Sl. No. 5(i)] | 193 | ₹ 10,000 | 10% |
| Bank Interest (Non-Securities) | Sec. 393(1) [Table: Sl. No. 5(ii)] | 194A | ₹50,000 (₹1,00,000 for Senior Citizens) | 10% |
| Dividends | Sec. 393(1) [Table: Sl. No. 2] | 194 | ₹ 10,000 | 10% |
| Partner's Remuneration / Interest | Sec. 393(1) [Table: Sl. No. 8] | 194T | Exceeds ₹20,000 annually | 10% |
| Purchase of Goods | Sec. 393(1) [Table: Sl. No. 8(ii)] | 194Q | Exceeds ₹50 Lakhs | 0.10% |
| E-commerce Participants | Sec. 393(1) [Table: Sl. No. 8(v)] | 194O | ₹5 Lakhs (For Indv/HUF) | 0.10% |
| Virtual Digital Assets (Crypto) | Sec. 393(1) [Table: Sl. No. 8(vi)] | 194S | ₹ 10,000 | 1% |
Notable Structural Changes to Keep in Mind
Partner's Remuneration (Sec 194T / Sec 393): Partnership firms and LLPs must deduct 10% TDS on any salary, bonus, commission, or interest paid to partners if the aggregate amount exceeds ₹20,000 in a financial year.
Removal of Section 206AB & 206CCA: The dual compliance burden of identifying "non-filers" to charge twice the normal TDS rate has been abolished. Higher deduction rates are now heavily simplified and tied primarily to missing/invalid PANs (Sec 206AA equivalent).
TCS on Sale of Goods Dropped: To eliminate overlapping compliance with TDS on purchase of goods, the old TCS Section 206C(1H) on the sale of goods has been completely removed.
Filing Mergers: Multiple single-transaction PAN-based forms (like 26QB for property, 26QC for rent) are being phased into a unified Form 141 framework for cleaner backend management.
Transition Rule: If the triggering event (date of credit or payment, whichever is earlier) happens on or before March 31, 2026, use the old 1961 Act section codes. For any bookkeeping or payments falling on or after April 1, 2026, the new Section 392/393 codes must be mapped onto your ERP and payroll returns to prevent processing rejections.
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