Published: May 2026 ยท 8 min read ยท Updated for Income Tax Act, 2025 (w.e.f. 1 April 2026)
What is TDS under the New Act?
Tax Deducted at Source (TDS) continues under the Income Tax Act, 2025 with the same fundamental mechanism โ the payer deducts tax at the point of payment and deposits it with the government. However, the 60+ scattered TDS sections (192โ194T) of the old 1961 Act have been consolidated into just Section 392 (salary TDS) and Section 393 (all non-salary TDS). Rates and thresholds remain unchanged โ only the section numbering and forms have been restructured.
Important transition rule: Payments/credits made up to 31 March 2026 โ old Act sections apply. Payments/credits from 1 April 2026 โ new Act (Section 392/393) applies. The governing law depends on the date of credit or payment, not the date of filing.
Key TDS Rates at a Glance
For the complete rate chart with all 25+ sections, visit our TDS Rate Chart tool page. Here are the most commonly applicable rates:
Salary & Employment
- Section 192 โ Salary: TDS at applicable slab rates based on estimated annual income. Employer computes tax after considering declared investments and deductions.
- Section 192A โ EPF Withdrawal: 10% TDS if premature withdrawal exceeds โน50,000 (before 5 years of service). No TDS if Form 15G/15H submitted.
Interest & Investments โ Sec 393(1) Sl.2-3 (formerly 194/194A/194K)
- Sec 393(1) Sl.3 (old 194A) โ Bank/Post Office Interest: 10% on interest exceeding โน50,000/year (โน1,00,000 for senior citizens โ doubled from โน50K). Other interest: โน10,000 threshold.
- Sec 393(1) Sl.2 (old 194) โ Dividends: 10% on dividend exceeding โน10,000 (up from โน5,000).
- Sec 393(1) (old 194K) โ Mutual Fund Dividend: 10% on income exceeding โน10,000 (up from โน5,000).
Professional & Contractor โ Sec 393(1) Sl.6 & Sl.11 (formerly 194C/194J/194H)
- Sec 393(1) Sl.6(i) (old 194C) โ Contractors: 1% for individual/HUF, 2% for others. Threshold unchanged: โน30,000 single or โน1,00,000 aggregate.
- Sec 393(1) Sl.11 (old 194J) โ Professional Fees: 10% for professional fees, 2% for technical services. Threshold raised to โน50,000/year (from โน30,000).
- Sec 393(1) (old 194H) โ Commission: 2% (reduced from 5%) on commission/brokerage exceeding โน20,000 (up from โน15,000).
- Sec 393(1) (old 194T) โ Partner Remuneration: 10% TDS on salary, remuneration, bonus, commission, and interest paid by firms to partners exceeding โน20,000. Effective from 1st April 2025.
Rent โ Sec 393(1) Sl.10 (formerly 194-I/194-IB)
- Sec 393(1) Sl.10 (old 194-I(a)) โ Plant/Machinery: 2% if monthly rent exceeds โน50,000 (threshold raised from โน2,40,000/year to โน6,00,000/year effectively).
- Sec 393(1) Sl.10 (old 194-I(b)) โ Land/Building: 10% if monthly rent exceeds โน50,000 (same threshold increase).
- Sec 393(1) (old 194-IB) โ Rent by Individuals: 2% (reduced from 5%) if monthly rent exceeds โน50,000 (deducted by tenant).
TDS Return Filing Due Dates (unchanged under new Act)
- Q1 (AprโJun): 31st July
- Q2 (JulโSep): 31st October
- Q3 (OctโDec): 31st January
- Q4 (JanโMar): 31st May
TDS Deposit Deadlines
- Government deductors: Same day as deduction
- Non-government deductors: 7th of the following month
- March deductions: 30th April
Penalties for Non-Compliance
- Late deduction: Interest @1% per month from due date of deduction
- Late deposit: Interest @1.5% per month from deduction date to deposit date
- Late return filing: โน200 per day until return is filed (maximum: TDS amount)
- No PAN of deductee (206AA): TDS at 20% or applicable rate, whichever is higher
- Section 206AB โ DELETED: The higher TDS provision for non-filers has been removed from FY 2025-26, reducing compliance burden for deductors.
Important: Section 234E penalty for late TDS return filing is โน200/day and is automatically computed by the system. This adds up fast โ a 90-day delay on a quarterly return means โน18,000 penalty regardless of the TDS amount.
New TDS Forms โ Income Tax Act, 2025
From Tax Year 2026-27, all old form names are replaced. Using old form numbers will make filings non-compliant.
- Form 138 (replaces 24Q): Quarterly TDS return for salary
- Form 140 (replaces 26Q): Quarterly TDS return for non-salary payments
- Form 141 (replaces 26QB/QC/QD/QE): Unified challan-cum-statement for property, rent, VDA
- Form 143 (replaces 27EQ): Quarterly TCS return
- Form 130 (replaces Form 16): Annual salary TDS certificate
- Form 131 (replaces Form 16A): Non-salary TDS certificate
- Form 121 (replaces Form 15G/15H): Nil TDS declaration for eligible individuals
- Form 168 (replaces Form 26AS): Annual Information Statement
Note: For FY 2025-26 (Q4 ending March 2026), continue using old forms (24Q, 26Q, Form 16). New forms apply only from Tax Year 2026-27 onwards.
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