TDS under the Income-tax Act, 2025: what changed from 1 April 2026

On 1 April 2026 the Income-tax Act, 2025 replaced the Income-tax Act, 1961, which had governed Indian income tax for more than sixty years. For most businesses the first place the change shows up isn’t the tax return. It is TDS: every challan, every quarterly statement and every certificate your accounts team produces now refers to a different Act, different sections and different form numbers.

The good news is that the substance of TDS on everyday business payments barely moved. This is a guide to what did change, what didn’t, and what to update so the first year under the new Act doesn’t produce a pile of mismatches.

What changed

Three things matter for an accounts team.

• One section instead of dozens. The old 194-series — 194A, 194C, 194H, 194I, 194J, 194Q and the rest — has been consolidated into section 393. Instead of a separate section for each kind of payment, section 393 lists them in tables, and TDS statements identify the nature of each payment with a code rather than a section number.
• New form numbers. The quarterly TDS statements and the certificates you issue have all been renumbered under the Income-tax Rules, 2026.
• New vocabulary. ‘Previous year’ and ‘assessment year’ are gone, replaced by a single ‘tax year’, which is simply the financial year in which the income arises.

The new form numbers

These are the ones a business deducting TDS will use:

What it is	Old form	New form
Quarterly TDS statement — salaries	24Q	138
Quarterly TDS statement — other payments to residents	26Q	140
Quarterly TDS statement — payments to non-residents	27Q	144
Quarterly TCS statement	27EQ	143
TDS certificate — salaries	16	130
TDS certificate — other payments	16A	131
Annual tax credit statement	26AS	168

Expect to see both sets of numbers for a while. Suppliers will keep asking for “your 16A”, and plenty of software screens still say 26Q. What matters is that the statements you file from tax year 2026-27 are the new ones.

What didn’t change

For the payments most businesses make every month, the rates and thresholds in force for FY 2025-26 carried over into section 393 unchanged:

Payment	Was	Rate	Threshold
Contractor — individual or HUF	194C	1%	₹30,000 a contract or ₹1 lakh a year
Contractor — company or firm	194C	2%	₹30,000 a contract or ₹1 lakh a year
Professional fees	194J	10%	₹50,000 a year
Technical services	194J	2%	₹50,000 a year
Rent — land or building	194I	10%	₹50,000 a month
Rent — plant or machinery	194I	2%	₹50,000 a month
Commission or brokerage	194H	2%	₹20,000 a year
Interest paid by a business (not a bank)	194A	10%	₹10,000 a year
Purchase of goods	194Q	0.1%	On purchases above ₹50 lakh a year

Also unchanged:

• Deposit dates. TDS is still due by the 7th of the following month, with March deductions due by 30 April.
• Statement dates. 31 July, 31 October, 31 January and 31 May for the four quarters.
• The no-PAN rule. Without a PAN you still deduct at the higher of 20% or the normal rate, with a 5% floor for purchases of goods.

Our TDS calculator is updated for tax year 2026-27 and applies the thresholds and the no-PAN rule for you.

Which Act applies to a payment

The dividing line is the earlier of credit or payment, the same trigger TDS has always used. If either happened before 1 April 2026, the 1961 Act governs the deduction; if both happen on or after that date, the 2025 Act does.

Three cases that come up in practice:

• A March invoice paid in April. The bill was credited to the supplier’s account in March, so the deduction belongs to the 1961 Act, even though the money left in April.
• An advance paid in March for April work. The payment came first, in March, so again the 1961 Act applies.
• A year-end provision. An expense provided for on 31 March 2026 and credited to a party or provision account is a March credit, so it falls under the old Act.

Getting the side of the line wrong means the deduction is reported under the wrong Act, and your supplier’s credit won’t appear where they expect it. The fix is administrative rather than expensive, but it takes time you would rather spend elsewhere.

What your accounts team should do

1. Update your software. Apply the Income-tax Act, 2025 updates in Tally, Zoho Books or whatever you use, and in your TDS return utility.
2. Remap vendor masters. Each vendor’s nature of payment needs to point to the right entry under section 393. Check a sample by hand; automatic mapping is not always right for vendors who straddle categories.
3. Refresh templates. Purchase orders, contracts and certificate formats that quote “TDS under section 194J” should reference the new Act for new agreements.
4. Watch the first quarter closely. Reconcile the first statement of tax year 2026-27 line by line against your books before filing, while the new codes are still unfamiliar.
5. Reconcile against Form 168. The annual tax credit statement is still how you and your suppliers confirm that every rupee deducted was reported against the right PAN.

Where your CA comes in

Computing, depositing and reporting TDS is routine accounting work, and it is part of what we run for clients every month through our GST and TDS compliance service. Interpreting a genuinely unusual payment, applying for a lower deduction certificate, dealing with non-resident withholding under a tax treaty, and representing you before the department are matters for your chartered accountant. OFS employs qualified CAs but is not a CA firm, and we don’t do that work.

If you want a second pair of eyes on your first statement under the new Act, that is exactly the sort of thing a short call is for.