COMPARATIVE ANALYSIS OF OLD VS NEW TDS/TCS FRAMEWORK (Income-tax Act, 1961 vs Income-tax Act, 2025 – Effective from 1 April 2026)
1. Introduction
The Income-tax Act, 2025 introduces a completely restructured TDS/TCS framework, replacing the scattered provisions of the Income-tax Act, 1961 with a codified, simplified, and technology-aligned system.
The major shift includes:
- Introduction of numeric codes (1001–1092)
- Consolidation under Sections 392, 393, and 394
- Standardisation of forms (138, 140, 141, 143, 144)
- Rationalisation of provisions without major rate changes
This article presents a detailed comparison of old vs new provisions, along with structural, procedural, and practical implications.
2. Structural Comparison
| Particulars | Old Law (1961 Act) | New Law (2025 Act) |
| Sections | Multiple sections (192–206C) | Consolidated into 392–394 |
| Coding System | No standardized coding | Unique numeric codes (1001–1092) |
| Classification | Based on section-wise provisions | Categorised into logical groups |
| Forms | 16, 16A, 26Q, etc. | New Forms 138–144 |
| Approach | Legal-centric | System & compliance-centric |
The new framework is designed for automation, return matching, and AI-based compliance systems.
3. Category-wise Comparison
4. Salary Payments
| Aspect | Old (Sec 192) | New (Sec 392) |
| Section | 192 | 392 |
| Codes | Not available | 1001–1003 |
| Rate | Slab | Slab |
| Forms | Form 16 | Form 138 |
✔ Change Nature: Structural only (no rate change)
1. Payments to Residents (Core TDS)
Covered under Section 393(1) in new law.
Commission & Brokerage
| Nature | Old Section | New Section | Rate | Forms |
| Insurance Commission | 194D | 393(1) | 5% | 140 |
| Brokerage | 194H | 393(1) | 5% | 140 |
✔ No change in rate, only restructuring.
2. Rent
| Nature | Old Section | New Section | Rate | Forms |
| Rent (Individual/HUF) | 194IB | 393(1) | 2% | 141 |
| Plant & Machinery | 194I(a) | 393(1) | 2% | 140 |
| Land/Building | 194I(b) | 393(1) | 10% | 140 |
✔ Simplified classification under one umbrella.
3. Immovable Property
| Nature | Old Section | New Section | Rate | Forms |
| Property Purchase | 194IA | 393(1) | 1% | 141 |
| JDA Payment | 194IC | 393(1) | 10% | 140 |
| Compensation | 194LA | 393(1) | 10% | 140 |
4. Interest Income
| Nature | Old Section | New Section | Rate | Forms |
| Securities | 193 | 393(1) | 10% | 140 |
| Bank Interest | 194A | 393(1) | 10% | 140 |
✔ No major change except consolidation.
5. Contract & Professional Payments
| Nature | Old Section | New Section | Rate | Forms |
| Contractor (Individual/HUF) | 194C | 393(1) | 1% | 140 |
| Contractor (Others) | 194C | 393(1) | 2% | 140 |
| Professional Fees- Payment by Individual/HUF (Non Audit to contractor, Professional or for commission | 194M | 393(1)[S.l. 6(ii)] | 2% | 141 |
| Fees for Professional Services in Sec 26 (2) (h) | 194J | 393(1) | 10% | 140 |
| Technical Services | 194J | 393(1) | 2% | 140 |
Important Change
Payment by Individual/HUF (non-audit) now explicitly covered under 393(1) Sl. 6(ii) (earlier Sec 194M).
6. Dividend, Insurance & Other Payments
| Nature | Old Section | New Section | Rate | Forms |
| Dividend | 194 | 393(1) | 10% | 140 |
| Insurance (taxable) | 194DA | 393(1) | 5% | 140 |
| Purchase of Goods | 194Q | 393(1) | 0.1% | 140 |
| E-commerce | 194O | 393(1) | 1% | 140 |
7. Emerging Areas
| Nature | Old Section | New Section | Rate | Forms |
| Perquisites (Business) | 194R | 393(1) | 10% | 140 |
| Virtual Digital Assets | 194S | 393(1) | 1% | 140 |
| Virtual Digital Assets by Individual/HUF-non audit | 194S | 393(1) | 1% | 141/142 |
✔ Continued with clarity in coding.
8. Payments to Non-Residents
Covered under Section 393(2)
| Nature | Old Section | New Section | Rate | Forms |
| General Payments | 195 | 393(2) | DTAA | 144 |
| Interest (Foreign Loan) | 194LC | 393(2) | 4–9% | 144 |
| Investment Income | 196A–196D | 393(2) | 10–20% | 144 |
✔ Key Feature: Uniform categorisation of non-resident payments.
9. Special Payments (All Persons)
| Nature | Old Section | New Section | Rate | Forms |
| Lottery Winnings | 194B | 393(3) | 30% | 140/144 |
| Online Gaming | 194BA | 393(3) | 30% | 140/144 |
| Cash Withdrawal | 194N | 393(3) | 2% | 140/144 |
| Partner Payments | 194T | 393(3) | 10% | 140/144 |
✔ Better classification and grouping.
1. TCS Provisions
Covered under Section 394
2. Traditional Goods (No Change)
| Nature | Old Section | New Section | Rate | Forms |
| Scrap | 206C | 394 | 1% | 143 |
| Timber | 206C | 394 | 2.5% | 143 |
2. Luxury Goods (Major Change)
Newly introduced categories:
- Wrist watches
- Art pieces
- Collectibles
- Sunglasses, handbags, shoes
- Sports equipment
- Yachts, helicopters
- Motor Vehicles
✔ All taxed at 1% TCS
3. LRS & Tour Packages
| Nature | Old Section | New Section | Rate | Forms |
| Education/Medical | 206C(1G) | 394 | 0.5% | 143 |
| Others | 206C(1G) | 394 | 20% | 143 |
| Overseas Tour | 206C(1G) | 394 | 5–20% | 143 |
4. Key Differences at a Glance
| Area | Major Change |
| Structure | Consolidation into 3 sections |
| Coding | Introduction of numeric codes |
| Forms | Completely redesigned |
| Scope | Inclusion of new-age transactions |
| Compliance | System-driven approach |
5. Practical Impact on Professionals
For Chartered Accountants
- Easier classification due to coding system
- Reduced ambiguity in section selection
- Improved reporting standardisation
For Businesses
- Better compliance tracking
- Simplified ERP/Tally integration
- Reduced litigation risk
For Government
- Improved data analytics
- Seamless matching with AIS/TIS
- Enhanced tax administration
6. Conclusion
The transition from the Income-tax Act, 1961 to the 2025 framework represents a paradigm shift from legal complexity to digital simplification.
While rates and tax base remain largely unchanged, the focus is clearly on:
- Ease of compliance
- Technology integration
- Future-ready taxation system
The new framework is expected to significantly improve transparency, efficiency, and compliance discipline in India’s tax ecosystem.
7. Author’s Note
This article is based on draft TDS/TCS payment codes and forms (138–144) notified under the Income-tax Act, 2025 and is intended for professional and academic discussion.
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Disclaimer: The information given in this document has been made on the basis of the tax laws prevailing. It is based on the analysis and interpretation of applicable laws as on date. The information in this document is for general informational purposes only and is not legal advice or a legal opinion. You should seek the advice of the legal counsel of your choice before acting upon any of the information in this document. Under no circumstances whatsoever, we are not responsible for any loss, claim, liability, damage(s) resulting from the use, omission or inability to use the information provided in the document.
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