Navigating the New Era: Comprehensive Guide to TDS/TCS Restructuring for FY 2026-27 under Income Tax Act, 2025
Summary: The New Income Tax Act, 2025 introduces a major restructuring of India’s TDS and TCS framework effective from 1 April 2026 by consolidating scattered provisions into simplified sections and adopting code-based compliance reporting. Existing TDS provisions under Sections 192 to 196D and TCS provisions under Section 206C have been reorganised primarily under Sections 392, 393 and 394. The law rationalises rates, revises thresholds, and introduces streamlined reporting formats and renamed compliance forms. The framework covers deductions on salary, professional fees, rent, interest, virtual digital assets, e-commerce transactions, winnings, overseas remittances, luxury goods and non-resident payments. The Act also provides updated slab rates under both new and old tax regimes, revised Section 87A rebates, enhanced standard deductions, and detailed surcharge provisions for domestic companies. Additionally, the legislation introduces new TDS/TCS form numbering and compliance procedures aimed at simplifying administration, improving reporting efficiency, and modernising tax deduction and collection mechanisms in India.
Page Contents
- KEY STRUCTURAL CHANGES UNDER NEW INCOME TAX ACT, 2025
- TDS on Payments to Non-Residents – FY 2026-27 (Tax Year 2026-27)
- TDS RATE CHART — FY 2026-27 (Tax Year 2026-27)
- INCOME TAX SLAB RATES — TAX YEAR 2026-27
- INCOME TAX SLAB RATES — TAX YEAR 2026-27 – OLD TAX REGIME
- Domestic Company Tax Rates
- SNAPSHOT OF NEW TDS TCS FORMS UNDER NEW IT ACT 2025
KEY STRUCTURAL CHANGES UNDER NEW INCOME TAX ACT, 2025
| Feature | Old Law (up to FY 2025-26) | New Law (FY 2026-27 onwards) |
| TDS Framework | Multiple scattered sections (192–196D) | Consolidated under Section 392 |
| TCS Framework | Section 206C | Consolidated under Section 393 |
| Reporting | Section-wise reporting | Code-based reporting system |
| Rate Rationalization | Multiple rates | Simplified & rationalized rates |
TDS RATE CHART — FY 2026-27 (Tax Year 2026-27) TDS on Payments to Residents
| Codes to be used in Returns | Old Section | Nature of Payment | New Section (IT Act 2025) | Rates (%) | Threshold (₹) |
| 1004 | 192 | Any payment of accumulated balance due to an employee | 392 | – | – |
| 1005 | 194D | Commission or brokerage – insurance | 393 | 2% in case for Individual | 20,000 |
| 10% in case for Others | |||||
| 1006 | 194H | Commission or Brokerage – others | 393 | 2% | 20,000 |
| 1008 | 194I(a) | Rent on machinery etc.- specified person | 393 | 2% | ₹ 50,000 per month |
| 1009 | 194I(b) | Rent other than machinery etc.- specified person | 393 | 10% | ₹ 50,000 per month |
| 1011 | 194IC | Payment on any consideration, not being consideration in kind, under the agreement referred to in section 67(14) | 393 | 10% | – |
| 1012 | 194IA | Payment of Compensation on Acquisition of Certain Immovable Property | 393 | 10% | ₹ 5 Lakh |
| 1013 | 194K | Income payable to a resident assessee in respect of Units of a specified Mutual Fund specified under Schedule VII or units from the Administrator of the specified undertaking or units from specified company | 393 | 10% | 10,000 |
| 1014 | 194LBA | Certain income in the form of interest from units of a business trust to a resident unit holder | 393 | 10% | – |
| 1015 | 194LBA | Certain income in the form of dividend from units of a business trust to a resident unit holder | 393 | 10% | – |
| 1017 | 194LBB | Any income, other than that proportion of income which is exempt under Schedule V , in respect of units of an investment fund specified in section 224, payable to its unitholder. | 393 | 10% | – |
| 1018 | 194LBC | Any income, in respect of an investment in a securitisation trust specified in section 221 to an investor. | 393 | 10% | – |
| 1019 | 193 | Any income by way of Interest on securities | 393 | 10% | 10,000 |
| 1020 | 194A | Any income by way of interest other than interest on securities, in case of deductee/payee is a senior citizen | 393 | 10% | 1,00,000 |
| 1021 | 194A | Any income by way of interest other than interest on securities, in case of deductee/payee is other than senior citizen | 393 | 10% | 50,000 |
| 1022 | 194A | Any income being interest other than interest on securities | 393 | 10% | 10,000 |
| 1023 | 194C | Any sum for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a designated person – if contractor is individual or Hindu undivided family | 393 | 1% in case for Individual | (a) ₹ 30000 for any such sum; and |
| 2% in case for Others | (b) ₹ 100000 in case of aggregate of such sums. | ||||
| 1024 | 194C | Any sum for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a designated person – if contractor is a person other than individual or Hindu undivided family | 393 | 1% in case for Individual | (a) ₹ 30000 for any such sum; and |
| 2% in case for Others | (b) ₹ 100000 in case of aggregate of such sums. | ||||
| 1026 | 194J(a) | Any sum by way of – (a) fees for technical services (not being a professional services); or (b) royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films; or (c) payee, engaged only in the business of operation of call centre | 393 | 2% | 50,000 |
| 1027 | 194J(b) | Any sum by way – (a) fees for professional services; or (b) any sum referred to in section 26(2)(h) | 393 | 10% | 50,000 |
| 1028 | 194J(b) | Any sum by way of remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 392, to a director of a company | 393 | 10% | – |
| 1029 | 194 | Any dividends (including on preference shares) declared. | 393 | 10% | ₹ 10,000 (Individual) |
| 1030 | 194DA | Any sum under a life insurance policy, including the sum allocated as bonus on such policy, other than the amount not includible in the total income under Schedule II | 393 | 2% | ₹ 1 lakh |
| 1031 | 194Q | Any sum for purchase of any goods | 393 | 0.10% | in excess of ₹ 50 lakh |
| 1033 | 194R | Any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession of any resident. | 393 | 10% | 20,000 |
| 1034 | 194R | Any benefit or perquisite, whether in cash or in kind or partly in cash and partly in kind, whether convertible into money or not, arising from business or the exercise of a profession of any resident. | 393 | 10% | 20,000 |
| 1035 | 194O | Sale of goods or provision of services by an e-commerce participant, facilitated by an e-commerce operator through its digital or electronic facility or platform. – any e commerce operator | 393 | 0.10% | ₹ 5 Lakh (Individual/HUF) |
| 1037 | 194S | Any sum by way of consideration for transfer of a virtual digital asset by other than Individual or Hindu Undivided Family | 393 | 1% | 10,000 |
| 1038 | 194SP | Any sum by way of consideration, whether in cash or in kind or partly in cash and partly in kind, for transfer of a virtual digital asset. | 393 | 1% | 10,000 |
| 1058 | 194B | Any income by way of winnings (other than winnings from – (a) any lottery; or (b) crossword puzzle; or (c) card game and other game of any sort; or (d) gambling or betting of any form or nature whatsoever | 393 | 30% | ₹ 10,000 in case of a single transactions |
| 1059 | 194B | Any income by way of winnings (other than winnings from–– (a) any lottery; or (b) crossword puzzle; or (c) card game and other game of any sort; or (d) gambling or betting of any form or nature whatsoever where consideration, is made in kind or cash is not sufficient to meet the tax liability and tax has been paid before such winnings are released | 393 | 30% | ₹ 10,000 in case of a single transactions |
| 1060 | 194BA | Any income by way of winnings from online game. | 393 | 30% | – |
| 1061 | 194BA | Any income by way of winnings from online games, is made in kind or cash is not sufficient to meet the tax liability and tax has been paid before such winnings are released | 393 | 30% | ₹ 10,000 in case of a single transactions |
| 1062 | 194BB | Any income by way of winnings from any horse race. | 393 | 30% | ₹ 10,000 in case of a single transactions |
| 1063 | 194G | Any income, credited or paid to a person, who is or has been stocking, distributing, purchasing or selling lottery tickets, by way of commission, remuneration or prize (by whatever name called) on such tickets | 393 | 2% | 20,000 |
| 1064 | 194N | Payment of certain amounts in cash by bank/ post office / co-operative society to a deductee being a co-operative society | 393 | 2% | ₹ 3 Crore |
| 1065 | 194N | Payment of certain amounts in cash by bank/ post office / co-operative society to a deductee being a person other than co-operative society | 393 | 2% | ₹ 1 Crore |
| 1066 | 194EE | Any amount referred to in section 80CCA(2)(a) of the Income-tax Act, 1961 (43 of 1961). | 393 | 10% | 2,500 |
| 1067 | 194T | Any sum in the nature of salary, remuneration, commission, bonus or interest paid to a partner of the firm or credited to his account (including capital account). | 393 | 10% | 20,000 |
TDS on Payments to Non-Residents – FY 2026-27 (Tax Year 2026-27)
| Codes to be used in Returns | Old Section | Nature of Payment | New Section (IT Act 2025) | Rates (%) |
| 1004 | 192A | Any payment of accumulated balance due to an employee | 392 | 10% |
| 1039 | 194E | Any income referred to in section 211 | 393 | 20% |
| 1040 | 194LC | Any income by way of interest payable in respect of monies borrowed in foreign currency from a source outside India,— | 393 | 5% |
| (a) under a loan agreement or issue of long term infrastructure bond on or after the 1st July, 2012 but before the 1st July, 2023; or | 393 | |||
| (b) by way of issue of any long-term bond on or after the 1st October, 2014 but before the 1st July, 2023, | 393 | |||
| which is approved by the Central Government in this behalf | 393 | |||
| 1041 | 194LD | Any income by way of interest payable in respect of monies borrowed from a source outside India by way of issue of rupee denominated bond before the 1st July, 2023 | 393 | 5% |
| 1042 | 194LC | Any income by way of interest payable in respect of monies borrowed from a source outside India by way of issue of any long-term bond or rupee denominated bond, which is listed only on a recognized stock exchange located in any International Financial Services Centre. – Issued on or after the 1st April, 2020 but before the 1st July, 2023 | 393 | 4% |
| 1043 | 194LC | Any income by way of interest payable in respect of monies borrowed from a source outside India by way of issue of any long-term bond or rupee denominated bond, which is listed only on a recognized stock exchange located in any International Financial Services Centre – Issued on or after the 1st July, 2023 | 393 | 9% |
| 1044 | 194LB | Income by way of Interest from Infrastructure debt fund payable to a Non-Resident | 393 | 5% |
| 1045 | 194LBA(a) | Any distributed income referred to in section 223, being of the nature referred to in Schedule V | 393 | 5% |
| 1046 | 194LBA(b) | Any distributed income referred to in section 223, being of the nature referred to in Schedule V | 393 | 10% |
| 1047 | 194LBC | Any distributed income referred to in section 223, being of the nature referred to in Schedule V | 393 | 35% – For Non Residents Company |
| 393 | 30% – For Non Residents other than companies | |||
| 1048 | 194LBB | Any income, other than that proportion of income which is exempt under Schedule V [Table: Sl. No. 2], in respect of units of an investment fund specified in section 224 | 393 | 10% – For Residents |
| 393 | 35% – For Non Residents Company | |||
| 393 | 30% – For Non Residents other than companies | |||
| 1049 | 194LBC | Any income in respect of an investment in a securitization trust specified in section 221 | 393 | 10% – For Residents |
| 393 | 35% – For Non Residents Company | |||
| 393 | 30% – For Non Residents other than companies | |||
| 1050 | 195 | Any income— | 393 | 20% or rate provided in the agreement, whichever is lower |
| (a) in respect of units of a Mutual Fund specified under Schedule VII | 393 | |||
| (b) from the specified company | 393 | |||
| 1051 | 196B | Any income in respect of units referred to in section 208 | 393 | 10% |
| 1052 | 196B | Any income by way of long-term capital gains arising from the transfer of units referred to in section 208 | 393 | 12.50% |
| 1053 | 196C | Any income by way of interest or dividends in respect of bonds or Global Depository Receipts referred to in section 209 | 393 | 10% |
| 1054 | 196C | Any income by way of long-term capital gains arising from the transfer of bonds or Global Depository Receipts referred to in section 209 | 393 | 12.50% |
| 1055 | 196D | Any income in respect of securities referred to in section 210(1) | 393 | 20% |
| 1056 | 196D | Any income in respect of securities referred to in section 210(1) | 393 | 10% |
| 1057 | 195 | Any interest (not being interest referred to against serial numbers 2, 3, 4 and 5) or any other sum chargeable under the provisions of this Act, not being income chargeable under the head “Salaries” | 393 | Average rate as applicable |
| 1058 | 194B | Any income by way of winnings (other than winnings from Sl. No. 2 of the table at section 393(3)) from–– (a) any lottery; or (b) crossword puzzle; or (c) card game and other game of any sort; or (d) gambling or betting of any form or nature whatsoever | 393 | 30% |
| 1059 | 194B | Any income by way of winnings (other than winnings from Sl. No. 2 of the table at section 393(3)) from–– (a) any lottery; or (b) crossword puzzle; or (c) card game and other game of any sort; or (d) gambling or betting of any form or nature whatsoever where consideration, is made in kind or cash is not sufficient to meet the tax liability and tax has been paid before such winnings are released | 393 | 30% |
| 1060 | 194BA | Any income by way of winnings from online game | 393 | 30% |
| 1061 | 194BA | Any income by way of winnings from online games, is made in kind or cash is not sufficient to meet the tax liability and tax has been paid before such winnings are released | 393 | 30% |
| 1062 | 194BB | Any income by way of winnings from any horse race | 393 | 30% |
| 1063 | 194G | Any income, credited or paid to a person, who is or has been stocking, distributing, purchasing or selling lottery tickets, by way of commission, remuneration or prize (by whatever name called) on such tickets | 393 | 2% |
| 1064 | 194N | Payment of certain amounts in cash by bank/ post office / co-operative society to a deductee being a co-operative society | 393 | 2% |
| 1065 | 194N | Payment of certain amounts in cash by bank/ post office / co-operative society to a deductee being a person other than co-operative society | 393 | 2% |
| 1066 | 194EE | Any amount referred to in section 80CCA(2)(a) of the Income-tax Act, 1961 (43 of 1961) | 393 | 10% |
| 1067 | 194T | Any sum in the nature of salary, remuneration, commission, bonus or interest paid to a partner of the firm or credited to his account (including capital account) | 393 | 10 |
TDS RATE CHART — FY 2026-27 (Tax Year 2026-27)
| Codes to be used in Returns | Old Section | Nature of Payment | New Section (IT Act 2025) | Rates (%) |
| 1068 | 206C – A | Sale of alcoholic liquor for human consumption. | 394 | 2% |
| 1069 | 206C – I | Sale of tendu leaves | 394 | 2% |
| 1070 | 206C – B | Sale of timber obtained under a forest lease | 394 | 2% |
| 1071 | 206C – C | Sale of timber obtained by any mode other than a forest lease | 394 | 2% |
| 1072 | 206C – D | Sale of any other forest produce (not being timber or tendu leaves) obtained under a forest lease. | 394 | 2% |
| 1073 | 206C – E | Sale of Scrap | 394 | 2% |
| 1074 | 206C – J | Sale of minerals, being coal or lignite or iron ore. | 394 | 2% |
| 1075 | 206C – L | Sale consideration exceeding threshold limit in case of sale of motor vehicle | 394 | 1% |
| 1076 | 206C – MA | Sale consideration exceeding threshold limit in case of sale of wrist watch | 394 | 1% |
| 1077 | 206C – MB | Sale consideration exceeding threshold limit in case of sale of art piece such as antiques, painting, sculpture | 394 | 1% |
| 1078 | 206C – MC | Sale consideration exceeding threshold limit in case of sale of collectibles such as coin, stamp | 394 | 1% |
| 1079 | 206C – MD | Sale consideration exceeding threshold limit in case of sale of yacht, rowing boat, canoe, helicopter | 394 | 1% |
| 1080 | 206C – ME | Sale consideration exceeding threshold limit in case of sale of pair of sunglasses | 394 | 1% |
| 1081 | 206C – MF | Sale consideration exceeding threshold limit in case of sale of bag such as handbag, purse | 394 | 1% |
| 1082 | 206C – MG | Sale consideration exceeding threshold limit in case of sale of pair of shoes | 394 | 1% |
| 1083 | 206C – MH | Sale consideration exceeding threshold limit in case of sale of sportswear and equipment such as golf kit, ski-wear | 394 | 1% |
| 1084 | 206C – MI | Sale consideration exceeding threshold limit in case of sale of home theatre system | 394 | 1% |
| 1085 | 206C – MJ | Sale consideration exceeding threshold limit in case of sale of horse for horse racing in race clubs and horse for polo | 394 | 1% |
| 1086 | 206C – T | Remittance under the Liberalised Remittance Scheme of an amount or aggregate of the amounts exceeding threshold limit for purposes of education or medical treatment (Threshold limit – ₹ 10 lakh) | 394 | 2% |
| 1087 | 206C – Q | Remittance under the Liberalised Remittance Scheme of an amount or aggregate of the amounts exceeding threshold limit for purposes other than education or medical treatment (Threshold limit – ₹ 10 lakh) | 394 | 20% |
| 1088 | 206C – O | Sale of “overseas tour programme package” including expenses for travel or hotel stay or boarding or lodging or any such similar or related expenditure with amount or aggregate of amounts up to ₹ 10,00,000. | 394 | 2% |
| 1089 | 206C – O | Sale of “overseas tour programme package” including expenses for travel or hotel stay or boarding or lodging or any such similar or related expenditure with amount or aggregate of amounts above ₹ 10,00,000. | 394 | 2% |
| 1090 | 206C – F | Use of parking lot for the purpose of business, excluding mining and quarrying of mineral oil (including petroleum and natural gas). | 394 | 2% |
| 1091 | 206C – G | Use of toll plaza for the purpose of business, excluding mining and quarrying of mineral oil (including petroleum and natural gas). | 394 | 2% |
| 1092 | 206C – H | Use of mine or quarry for the purpose of business, excluding mining and quarrying of mineral oil (including petroleum and natural gas). | 394 | 2% |
Important Notes-
Standard Deduction – Available for Salaried person upto Rs. 75,000 under New Regime and Rs. 50,000 under Old Regime
Section 87A Rebate (New Regime) – Available upto Rs. 60,000 on Normal Rate of Income (No Rebate on Special Rate of Income like LTCG , STCG etc.)
Section 87A Rebate (Old Regime) – Available upto Rs. 12,500 on all Income including Special Rate Income
INCOME TAX SLAB RATES — TAX YEAR 2026-27
| New Tax Regime (Default Regime) — Individual/HUF(Below 60 Years, 60–80 Years, Above 80 Years) | |
| Total Income (₹) | Tax Rate |
| Up to ₹4,00,000 | NIL |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
| Rebate u/s 87A: Tax rebate up to ₹60,000 available if total income ≤ ₹12,00,000 (effectively NIL tax up to ₹12 Lakh) | |
INCOME TAX SLAB RATES — TAX YEAR 2026-27 – OLD TAX REGIME
| Individual (Below 60 Years) | Senior Citizens (60–80 Years) | Super Senior Citizens (Above 80 Years) | |||
| Total Income (₹) | Tax Rate | Total Income (₹) | Tax Rate | Total Income (₹) | Tax Rate |
| Up to ₹2,50,000 | NIL | Up to ₹3,00,000 | NIL | Up to ₹5,00,000 | NIL |
| ₹2,50,001 – ₹5,00,000 | 5% | ₹3,00,001 – ₹5,00,000 | 5% | ₹5,00,001 – ₹10,00,000 | 20% |
| ₹5,00,001 – ₹10,00,000 | 20% | ₹5,00,001 – ₹10,00,000 | 20% | Above ₹10,00,000 | 30% |
| Above ₹10,00,000 | 30% | Above ₹10,00,000 | 30% | ||
Domestic Company Tax Rates
| Category | Tax Rate |
| Turnover ≤ ₹400 Crore (Previous Year) | 25% |
| Other Domestic Companies | 30% |
| New Manufacturing Company (Sec 115BAB) | 15% |
| Company opting Sec 115BAA | 22% |
| Surcharge & Health and Education Cess | |
| Component | Rate |
| Surcharge (Income > ₹50L to ₹1 Cr) | 10% of Tax |
| Surcharge (Income > ₹1 Cr to ₹2 Cr) | 15% of Tax |
| Surcharge (Income > ₹2 Cr to ₹5 Cr) | 25% of Tax |
| Surcharge (Income > ₹5 Cr) | 37% of Tax (Old Regime) / 25% cap (New Regime) |
| Health & Education Cess | 4% on (Tax + Surcharge) |
| SECTION WISE SUMMARY OF TDS/TCS PROVISIONS AS PER NEW INCOME TAX ACT, 2025 | |
| Nature of Provision | New Section |
| TDS on Salary | 392 |
| TDS on Other than Salary | 393 |
| TCS | 394 |
| Certificates | 395 |
| Tax Deducted is Income Received | 396 |
| Compliance & Reporting | 397 |
| Consequences to Failure to Pay/Deduct/Collect | 398 |
| Processing | 399 |
| Power of Central Government to Relax Provision of this Chapter | 400 |
| Bar Against Direct Demand of Assessee | 401 |
| Interpretation | 402 |
SNAPSHOT OF NEW TDS TCS FORMS UNDER NEW IT ACT 2025
| OLD FORM NAME | NEW FORM NAME | PURPOSE |
| FORM 16 | FORM 130 | SALARY CERTIFICATE |
| FORM 16A | FORM 131 | TDS CERTIFICATE TO OTHER THAN SALARIED PERSONS |
| 26AS | FORM 168 | AIS |
| 24Q | FORM 138 | QUARTERLY TDS STATEMENT FOR SALARY |
| 26Q | FORM 140 | QUARTERLY TDS STATEMENT FOR OTHER THAN SALARY |
| 27Q | FORM 144 | QUARTERLY TDS STATEMENT FOR NRIs |
| 27EQ | FORM 143 | QUARTERLY TCS STATEMENT |
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