"The Income-tax Act, 2025 has restructured TDS into a comprehensive table-based framework — updating section numbers, thresholds, and rates that businesses have relied on for decades."
From 1st April 2026, all TDS provisions under the Income-tax Act, 1961 stand replaced by Sections 392 to 402 of the Income-tax Act, 2025. This is not merely a renumbering exercise — several thresholds, rates, and conditions have changed. This guide walks you through the key changes and what your business needs to update.
The New TDS Framework — Sections 392 to 402
Section 392 now contains a master TDS rate table. Each category of payment has its own sub-section:
| New Section | Nature of Payment | Rate | Threshold |
|---|---|---|---|
| Section 393 | Salary | Per slab | Basic exemption limit |
| Section 394 | Professional / Technical fees | 10% | ₹50,000 per year |
| Section 395 | Rent — land & building | 10% | ₹2,40,000 per year |
| Section 395 | Rent — plant & machinery | 2% | ₹2,40,000 per year |
| Section 396 | Commission & brokerage | 5% | ₹15,000 per year |
| Section 397 | Interest (other than bank) | 10% | ₹5,000 per year |
What Businesses Must Update Immediately
- Update TDS rate master in Tally / accounting software with new section numbers
- Verify thresholds for each vendor category — several have changed from the 1961 Act
- Update Form 26Q and 24Q templates — old section numbers (194C, 194J, 194I etc.) no longer apply
- Review all vendor contracts where TDS clauses reference old section numbers
- Update TAN registration details if your business structure changed
Critical: Filing TDS returns with old section numbers (194J, 194C, 44AB etc.) for Tax Year 2026-27 will result in mismatches and potential notices. Update your software immediately.
Compliance Calendar — Tax Year 2026-27
| Activity | Due Date |
|---|---|
| Monthly TDS payment | 7th of the following month |
| Q1 TDS Return (Apr–Jun 2026) | 31 July 2026 |
| Q2 TDS Return (Jul–Sep 2026) | 31 October 2026 |
| Q3 TDS Return (Oct–Dec 2026) | 31 January 2027 |
| Q4 TDS Return (Jan–Mar 2027) | 31 May 2027 |
| Form 16A to deductee | Within 15 days of filing quarterly return |
Common Mistakes to Avoid
- Using old section numbers (194C, 194J, 194I) in new filings
- Missing the revised thresholds — lower thresholds apply for certain payment types
- Not deducting TDS on payments that were previously below threshold but now fall within scope
- Delay in depositing TDS — interest at 1.5% per month applies from date of deduction
- Non-filing of TDS returns — penalty of ₹200 per day under Section 444 (new Act)
Action Checklist for Businesses
- ✓ Update software TDS rate master to new section numbers
- ✓ Map all old sections to their new equivalents
- ✓ Update vendor master with correct TDS categories
- ✓ Verify revised thresholds for each payment type
- ✓ Update Form 26Q/24Q filing templates
- ✓ Train accounts team on new section numbers
- ✓ Review contracts with TDS clauses
The contents of this article are based on the author's interpretation of the applicable law and are intended solely for informational purposes. They do not constitute professional tax or legal advice. For advice specific to your situation, please consult a qualified Chartered Accountant. Prepared by R K N & Associates, Chartered Accountants, Hyderabad.