Introduction
Good news! The Income Tax Act, 2025 (effective from 1st April 2026) has made TDS/TCS compliance much simpler. Earlier, rules were spread across 69 different sections. Now, everything is in just 13 sections (Sections 380-400) with easy tables.
The Big Picture: What Changed?
Aspect | Old Act (1961) | New Act (2025) |
Number of Sections | 69 sections | 13 sections |
Total Words | 27,452 words | 14,675 words (47% less) |
Format | Lengthy paragraphs | Simple tables |
TDS Rates | Same | Same (no change) |
New Section Numbers (From 1st April 2026)
New Section | What It Covers | Replaces Old Sections |
Section 392 | TDS on Salary | Old Sec 192, 192A |
Section 393 | TDS on All Other Payments | Old Sec 193 to 196D (40+ sections) |
Section 394 | TCS (Tax Collected at Source) | Old Sec 206C |
Section 396 | Certificate for Lower/NIL TDS | Old Sec 197 |
Section 397 | Declaration (Form 15G/15H) | Old Sec 197A |
TDS Rate Chart for Tax Year 2026-27
Part A: TDS for Individuals
Nature of Payment | New Section Reference | Threshold | Rate |
Salary | Section 392 | No threshold | Slab |
Interest from Bank FD | Section 393(1), Table 1, Sl.No.7 | ₹50,000 (₹1L Sr.Cit) | 10% |
Rent received | Section 393(1), Table 1, Sl.No.4 | ₹2,40,000/year | 10% |
Dividend | Section 393(1), Table 1, Sl.No.6 | ₹5,000/year | 10% |
Lottery/Game Show | Section 393(3), Table 3, Sl.No.1 | ₹10,000 | 30% |
Online Gaming | Section 393(3), Table 3, Sl.No.2 | From ₹1 | 30% |
Part B: TDS for Business Payments
Nature of Payment | New Section Reference | Threshold | Rate |
Contractor (Ind/HUF) | Section 393(1), Table 1, Sl.No.1 | ₹30K/₹1L | 1% |
Contractor (Co/Firm) | Section 393(1), Table 1, Sl.No.1 | ₹30K/₹1L | 2% |
Professional Fees | Section 393(1), Table 1, Sl.No.2 | ₹30,000/year | 10% |
Rent - Building | Section 393(1), Table 1, Sl.No.4 | ₹2,40,000/year | 10% |
Rent - Machinery | Section 393(1), Table 1, Sl.No.4 | ₹2,40,000/year | 2% |
Commission | Section 393(1), Table 1, Sl.No.1(ii) | ₹15,000/year | 5% |
Part C: TDS on Property & Investments
Nature of Payment | New Section Reference | Threshold | Rate |
Buying Property | Section 393(1), Table 1 | > ₹50 lakh | 1% |
Purchase of Goods | Section 393(1), Table 1, Sl.No.8 | > ₹50 lakh/year | 0.1% |
Crypto/VDA | Section 393(3), Table 3, Sl.No.4 | ₹50K/₹10K | 1% |
E-Commerce | Section 393(3), Table 3 | > ₹5 lakh/year | 1% |
TCS Rate Chart for Tax Year 2026-27 (Section 394)
Transaction | Threshold | TCS Rate |
Car > ₹10 Lakh | ₹10,00,000 | 1% |
Foreign Tour Package | No threshold | 2% |
LRS – Education | ₹10 lakh/year | 2% |
LRS – Medical | ₹10 lakh/year | 2% |
LRS – Education (Loan) | ₹10 lakh/year | 0.5% |
LRS – Other | ₹10 lakh/year | 20% |
Sale of Goods > ₹50L | ₹50 lakh/year | 0.1% |
Budget 2026: Major TCS Relief
Great news for those sending money abroad!
Purpose | Earlier Rate | New Rate (1 Apr 2026) | Savings |
Education abroad | 5% | 2% ✓ | 60% lower |
Medical abroad | 5% | 2% ✓ | 60% lower |
Tour package | 5%-20% | 2% (flat) ✓ | Up to 90% |
Other purposes | 20% | 20% | No change |
How Much Will You Save?
Amount Sent | Purpose | Old TCS | New TCS | Savings |
₹20 Lakh | Child's education | ₹50,000 | ₹20,000 | ₹30,000 |
₹15 Lakh | Family vacation | ₹1,50,000 | ₹30,000 | ₹1,20,000 |
₹25 Lakh | Medical treatment | ₹75,000 | ₹30,000 | ₹45,000 |
Remember: TCS is NOT extra tax! It gets adjusted when you file ITR. Excess TCS is refunded.
Key Changes You Should Know
1. Manpower/Staffing Services – Lower TDS (Budget 2026)
Earlier confusion resolved! Now clearly 1% or 2% (same as contractors). Lower TDS = better cash flow.
2. Motor Accident Compensation – No TDS (Budget 2026)
No TDS on interest from Motor Accident Claims Tribunal. Relief for accident victims and families.
3. Advertising Services – Higher TDS
Now under Professional Services (Section 393). TDS rate: 10% (earlier 5% under Commission).
4. Lower/NIL TDS Certificate – Expanded (Section 396)
Now available for ALL TDS provisions. Single unified digital procedure.
Compliance Calendar: TDS/TCS Due Dates
Compliance | Due Date |
TDS/TCS Payment (Monthly) | 7th of next month |
March TDS/TCS Payment | 30th April |
Q1 Return (Apr-Jun) | 31st July |
Q2 Return (Jul-Sep) | 31st October |
Q3 Return (Oct-Dec) | 31st January |
Q4 Return (Jan-Mar) | 31st May |
Form 16 (Salary) | 15th June |
Section Mapping: Old vs New (Quick Reference)
What You're Looking For | Old Section | New Section (2025 Act) |
Salary TDS | 192 | Section 392 |
Interest on Securities | 193 | Section 393(1), Table 1, Sl.5 |
Dividends | 194 | Section 393(1), Table 1, Sl.6 |
Bank Interest | 194A | Section 393(1), Table 1, Sl.7 |
Lottery/Winnings | 194B, 194BB | Section 393(3), Table 3, Sl.1 |
Contractors | 194C | Section 393(1), Table 1, Sl.1 |
Commission | 194H | Section 393(1), Table 1, Sl.1(ii) |
Rent | 194I, 194-IB | Section 393(1), Table 1, Sl.4 |
Professional Fees | 194J | Section 393(1), Table 1, Sl.2 |
Property Purchase | 194-IA | Section 393(1), Table 1 |
Goods Purchase | 194Q | Section 393(1), Table 1, Sl.8 |
Crypto/VDA | 194S | Section 393(3), Table 3, Sl.4 |
Non-Resident | 195 | Section 393(2), Table 2 |
TCS | 206C | Section 394 |
Quick Summary
What Changed | Details |
Structure | 69 → 13 sections (Sections 380-400) |
Word Count | 27,452 → 14,675 (47% reduction) |
Main TDS Section | Section 393 with 4 tables |
Main TCS Section | Section 394 |
TCS on LRS | 5% → 2% (Education/Medical) |
Tour Package TCS | Various → Flat 2% |
Effective From | 1st April 2026 |
Disclaimer
This document is for informational purposes only. Please consult a qualified Chartered Accountant for specific guidance. Provisions are based on Income Tax Act 2025 and Budget 2026 as announced.
Himanshu Majithiya & Co.
Chartered Accountants
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