TDS/TCS Framework at a Glance
New Income Tax Act, 2025 — Consolidated & Unified Compliance System
📌 Core Sections
Sections 392 (Salary) · 393 (Residents/Non-Residents) · 394 (TCS)
✅ Key Benefit
Fragmented old sections (192, 194A, 194C…) unified into a single compliance engine
📄 Quarterly Forms
Form 138 (24Q) · Form 140 (26Q) · Form 143 (27Q) · Form 144 (27EQ)
⚠️ No Change
Majority of TDS/TCS rates and thresholds remain unchanged in the new Act
Key Highlights of the New Income Tax Act (TDS/TCS Framework):
1. Sections 392 to 394 house all TDS/TCS provisions in the new Act.
2. Terminology change: "Tax Year" replaces "Previous Year" and "Financial Year".
3. Compliance is now streamlined with a single TDS engine and uniform TCS rule.
4. Failure to deduct TDS: Interest @ 1% per month (Sec 398(3)(a)(i)).
5. Failure to deposit after deduction: Interest @ 1.5% per month (Sec 398(3)(a)(ii)).
6. Late filing fee: ₹200 per day of default, not exceeding total tax deductible (Sec 427).
1. Sections 392 to 394 house all TDS/TCS provisions in the new Act.
2. Terminology change: "Tax Year" replaces "Previous Year" and "Financial Year".
3. Compliance is now streamlined with a single TDS engine and uniform TCS rule.
4. Failure to deduct TDS: Interest @ 1% per month (Sec 398(3)(a)(i)).
5. Failure to deposit after deduction: Interest @ 1.5% per month (Sec 398(3)(a)(ii)).
6. Late filing fee: ₹200 per day of default, not exceeding total tax deductible (Sec 427).
Section Structure Map
| New Section | Subject | Old Section(s) | Form No. (New) | Form No. (Old) |
|---|---|---|---|---|
| Section 392 | Salary TDS | 192 | Form 138 | 24Q |
| Section 393(1) | TDS – Payments to Residents | 193, 194, 194A…194S | Form 140 | 26Q |
| Section 393(2) | TDS – Payments to Non-Residents | 195, 196A…196D | Form 144 | 27Q |
| Section 393(3) | TDS for Any Person (Lottery, Games, Cash) | 194B, 194BA, 194N | Form 140 | 26Q |
| Section 394 | Tax Collection at Source (TCS) | 206C | Form 143 | 27EQ |
| Section 397(2) | Higher TDS for Non-PAN cases | 206AA / 206CC | Form 138/140/144/143 | 24Q/26Q/27Q/27EQ |
TDS – Payments to Residents
Section 392 (Salary) & Section 393(1) — Form No. 138 & 140
| Nature of Payment | New Section | Section Code | Old Section | Threshold Limit | Rate |
|---|---|---|---|---|---|
| SECTION 392 — SALARY | |||||
| Payment to Govt employees (other than Union Govt) | 392 | 1001 | 192 | — | Slab Rates |
| Payment to Employees other than Govt Employees | 392 | 1002 | 192 | — | Slab Rates |
| Salary — Government employees | 392 | 1003 | 192 | — | Slab Rates |
| Payment of accumulated balance due to employee (PF) | 392(7) | 1004 | 192A | ₹50,000 | 10% |
| SECTION 393(1) — PAYMENTS TO RESIDENTS · Commission & Brokerage | |||||
| Commission or brokerage – Insurance | 393(1)(1)(i) | 1005 | 194D | ₹20,000 | 2% (Ind) / 10% (Others) |
| Commission or brokerage – Others | 393(1)(1)(ii) | 1006 | 194H | ₹20,000 | 2% |
| SECTION 393(1) — Rent | |||||
| Rent (land/building) — Individual/HUF (Tax Audit not applicable) | 393(1)(2)(i) | — | 194IB | ₹50,000/month | 2% |
| Rent (Plant/Machinery/Equipment) | 393(1)(2)(ii)(a) | 1008 | 194I(a) | ₹50,000/month | 2% |
| Rent (Land/Building/Furniture/Fittings) | 393(1)(2)(ii)(b) | 1009 | 194I(b) | ₹50,000/month | 10% |
| SECTION 393(1) — Immovable Property | |||||
| Transfer of immovable property (under Sec 67(14)) | 393(1)(3)(ii) | 1011 | 194IC | Nil | 10% |
| Transfer of immovable property (sale consideration) | 393(1)(3)(ii) | 1011 | 194-IA | ₹50,00,000 | 1% on consideration |
| Compensation for compulsory acquisition (non-agri) | 393(1)(3)(iii) | 1012 | 194LA | ₹5,00,000 | 10% |
| SECTION 393(1) — Capital Market Income | |||||
| Income in respect of units / Mutual funds | 393(1)(4)(i) | 1013 | 194K | ₹10,000 | 10% |
| Income from Business Trust – Interest | 393(1)(4)(ii) | 1014 | 194LBA | Nil | 10% |
| Income from Business Trust – Dividend | 393(1)(4)(ii) | 1015 | 194LBA | Nil | 10% |
| Income from Business Trust – Renting (REIT) | 393(1)(4)(ii) | 1016 | 194LBA | Nil | 10% |
| Income from Any Investment Trust | 393(1)(4)(iii) | 1017 | 194LBB | Nil | 10% |
| Income from Any Securitization Trust | 393(1)(4)(iv) | 1018 | 194LBC | Nil | 10% |
| SECTION 393(1) — Interest | |||||
| Interest on securities | 393(1)(5)(i) | 1019 | 193 | ₹10,000 | 10% |
| Interest (other than securities) – Senior Citizens | 393(1)(5)(ii)(a) | 1020 | 194A | ₹1,00,000 | 10% |
| Interest (other than securities) – Others | 393(1)(5)(ii)(b) | 1021 | 194A | ₹50,000 | 10% |
| Interest on other than securities (other sources) | 393(1)(5)(iii) | 1022 | 194A | ₹10,000 | 10% |
| SECTION 393(1) — Contractors & Professional Fees | |||||
| Contractor payments – Individual/HUF | 393(1)(6)(i)(a) | 1023 | 194C | ₹30,000/contract; ₹1,00,000 aggregate | 1% |
| Contractor payments – Others | 393(1)(6)(i)(b) | 1024 | 194C | ₹30,000/contract; ₹1,00,000 aggregate | 2% |
| Fees for Technical Services (FTS) | 393(1)(6)(iii)(a) | 1026 | 194J(a) | ₹50,000 | 2% |
| Fees for Professional Services | 393(1)(6)(iii)(b) | 1027 | 194J(b) | ₹50,000 | 10% |
| Director Remuneration (non-salary) | 393(1)(6)(iii)(b) | 1028 | 194J(b) | Nil | 10% |
| SECTION 393(1) — Other Cases | |||||
| Dividend (including preference shares) | 393(1)(7) | 1029 | 194 | ₹10,000 (Individual) / Nil (Others) | 10% |
| Life insurance policy payment | 393(1)(8)(i) | 1030 | 194DA | ₹1,00,000 | 2% |
| Purchase of any goods (buyer) | 393(1)(8)(ii) | 1031 | 194Q | ₹50 lakh; turnover ₹10 crore | 0.1% (excess over ₹50L) |
| Payment to Specified Senior Citizen | 393(1)(8)(iii) | 1032 | 194P | — | Rates in force |
| Benefits / Perquisites (business/profession) | 393(1)(8)(iv) | 1033 | 194R | ₹20,000 | 10% |
| E-commerce payments/sales | 393(1)(8)(v) | 1035 | 194O | Nil | 0.1% |
| Virtual Digital Assets (VDA) – Other than Ind/HUF | 393(1)(8)(vi) | 1037 | 194S | Nil | 1% |
| Virtual Digital Assets (VDA) – Individual/HUF | 393(1)(8)(vi) | 1038 | 194SP | Nil | 1% |
| SECTION 393(3) — Payments to ANY Person (Lottery, Games, Cash) | |||||
| Winnings from lottery/crossword/card game/gambling | 393(3)(1)/(3) | 1058/1062 | 194B/194BB | ₹10,000/transaction | 30% |
| Winnings from online games | 393(3)(2) | 1060 | 194BA | Nil | 30% |
| Commission on lottery tickets | 393(3)(4) | 1063 | 194G | ₹20,000 | 2% |
| Cash withdrawal – Co-operative society | 393(3)(5)(a) | 1064 | 194N | ₹3 crore | 2% |
| Cash withdrawal – Other persons | 393(3)(5)(b) | 1065 | 194N | ₹1 crore | 2% |
| Partner salary/remuneration/interest from firm | 393(3)(7) | 1067 | — | — | As applicable |
| SECTION 397(2) — Higher rate in absence of PAN | Failure to furnish PAN (higher rate applicable) | 397(2)(b)(i) | — | 206AA | — | Higher of 5% / 20% |
TDS – Payments to Non-Residents
Section 393(2) — Form No. 144 (earlier Form 27Q)
| Nature of Payment | New Section | Code | Old Section | Threshold | Rate |
|---|---|---|---|---|---|
| Non-resident sportsmen or sports associations | 393(2)(1) | 1039 | 194E | Nil | 20% |
| Interest on foreign currency loans (approved bonds, before 1 Jul 2023) | 393(2)(2) | 1040 | 194LC(1) | Nil | 5% |
| Interest on rupee denominated bonds (before 1 Jul 2023) | 393(2)(3) | 1041 | 194LD | Nil | 5% |
| Interest on long-term bonds listed on IFSC (Apr 2020–Jul 2023) | 393(2)(4)(a) | 1042 | 194LC(2) | Nil | 4% |
| Interest on long-term bonds listed on IFSC (on/after 1 Jul 2023) | 393(2)(4)(b) | 1043 | 194LC(3) | Nil | 9% |
| Any income by way of interest (general) | 393(2)(5) | 1044 | 194LB | Nil | 5% |
| Payments to NR in respect of units of non-residents | 393(2)(10) | 1050 | 196A | Nil | 20% or DTAA rate (lower) |
| Income from units to offshore funds | 393(2)(11)&(12) | 1051/1052 | 196B | Nil | 12.5% |
| Income from foreign currency bonds or GDR – Interest/Dividend | 393(2)(13) | 1053 | 196C | Nil | 10% |
| Income from foreign currency bonds or GDR – Long-term capital gain | 393(2)(14) | 1054 | 196C | Nil | 12.5% |
| Securities income – Foreign Institutional Investor | 393(2)(15) | 1055 | 196D | Nil | 20% |
| Securities income – Specified Fund (Schedule VI) | 393(2)(16) | 1056 | 196D | Nil | 10% |
| Payments to non-residents – Interest/Royalty/FTS (general) | 393(2)(17) | 1057 | 195 | Nil | Rates in force / DTAA |
| Failure to furnish PAN (higher rate applicable) | 397(2) | — | 206AA | — | Higher of 20% |
Tax Collection at Source (TCS)
Section 394 — Form No. 121 / 133 (earlier Form 27EQ)
| Nature of Transaction | New Section | Code | Old Section | Threshold | Rate |
|---|---|---|---|---|---|
| SECTION 394(1) — TAX COLLECTION AT SOURCE · Forest / Natural Resources | |||||
| Sale of alcoholic liquor for human consumption | 394(1)(1) | 1068 | 206C(1)(i) | Nil | 2% |
| Sale of tendu leaves | 394(1)(2) | 1069 | 206C(1)(ii) | Nil | 2% |
| Sale of timber obtained under a forest lease | 394(1)(3) | 1070 | 206C(1)(iii)/(iv) | Nil | 2% |
| Sale of timber obtained by any mode other than a forest lease | 394(1)(3) | 1071 | 206C(1)(iii)/(iv) | Nil | 2% |
| Sale of any other forest produce (not being timber or tendu leaves) | 394(1)(3) | 1072 | 206C(1)(iii)/(iv) | Nil | 2% |
| Sale of Scrap | 394(1)(4) | 1073 | 206C(1)(vi) | Nil | 2% |
| Sale of minerals – coal / lignite / iron ore | 394(1)(5) | 1074 | 206C(1)(vii) | Nil | 2% |
| SECTION 394(1) — Luxury Goods (> ₹10 Lakh) | |||||
| Sale of motor vehicle | 394(1)(6)(a) | 1075 | 206C(1F) | Aggregate > ₹10,00,000 | 1% |
| Sale of wrist watch | 394(1)(6)(b) | 1076 | — | Aggregate > ₹10,00,000 | 1% |
| Sale of art piece / antiques / paintings / sculpture | 394(1)(6)(b) | 1077 | — | Aggregate > ₹10,00,000 | 1% |
| Sale of collectibles – coins / stamps | 394(1)(6)(b) | 1078 | — | Aggregate > ₹10,00,000 | 1% |
| Sale of yacht / rowing boat / canoe / helicopter | 394(1)(6)(b) | 1079 | — | Aggregate > ₹10,00,000 | 1% |
| Sale of pair of sunglasses | 394(1)(6)(b) | 1080 | — | Aggregate > ₹10,00,000 | 1% |
| Sale of bag – handbag / purse | 394(1)(6)(b) | 1081 | — | Aggregate > ₹10,00,000 | 1% |
| Sale of pair of shoes | 394(1)(6)(b) | 1082 | — | Aggregate > ₹10,00,000 | 1% |
| Sale of sportswear & equipment (golf kit / ski-wear) | 394(1)(6)(b) | 1083 | — | Aggregate > ₹10,00,000 | 1% |
| Sale of home theatre system | 394(1)(6)(b) | 1084 | — | Aggregate > ₹10,00,000 | 1% |
| Sale of horse for horse racing / polo | 394(1)(6)(b) | 1085 | — | Aggregate > ₹10,00,000 | 1% |
| SECTION 394(1) — Liberalised Remittance Scheme (LRS) | |||||
| Remittance under LRS – Education or Medical treatment | 394(1)(7)(a) | 1086 | 206C(1G)(a) | Aggregate > ₹10,00,000 | 2% |
| Remittance under LRS – Other purposes | 394(1)(7)(b) | 1087 | — | — | 20% |
| SECTION 394(1) — Overseas Tour Packages | |||||
| Sale of overseas tour programme package – up to ₹10 lakh | 394(1)(8)(a) | 1088 | 206C(1G)(b) | Aggregate ≤ ₹10,00,000 | 2% |
| Sale of overseas tour programme package – exceeding ₹10 lakh | 394(1)(8)(b) | 1089 | — | Aggregate > ₹10,00,000 | 20% |
| SECTION 394(1) — Parking / Toll / Mine / Quarry | |||||
| Use of parking lot or toll plaza or mine or quarry (business use) | 394(1)(9) | 1090–1092 | 206C(1C) | Nil | 2% |
| SECTION 397(2) — Higher rate in absence of PAN | |||||
| Failure to furnish PAN (higher rate applicable) | 397(2)(b)(ii) | — | 206CC | — | Higher of 5% / not exceeding 20% |
Compliance Dates & Deadlines
Monthly deposits, quarterly filings, and certificate issuance timelines
🏦Monthly TDS Deposit — Section 392/393
April to February: Deposit within 7 days after the month of deduction.
March: Deposit within 30 days after the month ends.
March: Deposit within 30 days after the month ends.
🏪Monthly TCS Deposit — Section 394
April to March: Deposit within 7 days after the month of collection (uniform for all months).
Quarterly TDS/TCS Statement Filing
Form No. 138 / 140 / 143 / 144 (earlier 24Q / 26Q / 27Q / 27EQ)
| Quarter | Period | Due Date |
|---|---|---|
| Q1 | April – June | 31st July of the Tax Year |
| Q2 | July – September | 31st October of the Tax Year |
| Q3 | October – December | 31st January of the Tax Year |
| Q4 | January – March | 31st May of the Tax Year |
Form 15G/15H Filing — Form No. 121
| Quarter | Period | Due Date |
|---|---|---|
| Q1 | April – June | 7th July of the Tax Year |
| Q2 | July – September | 7th October of the Tax Year |
| Q3 | October – December | 7th January of the Tax Year |
| Q4 | January – March | 7th April of the Tax Year |
TDS/TCS Certificate Issuance
Form Nos. 130 / 131 / 132 / 133 (earlier 16 / 16A / 16B / 27D)
| Form | Issued Against | Due Date |
|---|---|---|
| Form 130 (old Form 16) | Form 138 (Salary/24Q) | 15th June of FY following Tax Year |
| Form 131 (old Form 16A) | Form 140 & 144 (26Q & 27Q) | 15th June of FY following Tax Year |
| Form 132 (old 16B/16C/16D/16E) | Form 141 (26QB/QC/QD/QE) | Within 15 days from due date of challan-cum-statement |
| Form 133 (old Form 27D) | Quarterly TCS Statement | Q1: 15 Aug · Q2: 15 Nov · Q3: 15 Feb · Q4: 15 Jun |
Penalties & Interest
- Failure to deduct TDS/TCS: Interest @ 1% per month or part thereof, from the date tax was deductible/collectible to the date of actual deduction/collection — Section 398(3)(a)(i).
- Failure to deposit after deduction/collection: Interest @ 1.5% per month or part thereof, from the date of deduction/collection to the date of actual payment — Section 398(3)(a)(ii).
- Failure to file TDS/TCS statements: Fee of ₹200 per day for the duration of default. Such fee shall not exceed the total tax deductible/collectible — Section 427.
Income Tax Forms — New vs Old
Complete mapping of IT Rules, 2026 forms to old IT Rules, 1962 forms
| New Form No. (IT Rules 2026) |
Old Form No. (IT Rules 1962) |
Description |
|---|---|---|
| 1 | 3BB | Monthly statement by stock exchange for modified client codes |
| 2 | 5B | Application for notification of zero coupon bond u/s 2(112) |
| 3 | 5BA | Certificate of accountant under rule 7 |
| 4 | 3CT | Income attributable to assets located in India u/s 9(10)(a) |
| 5 | 3AF | Statement of preliminary expenses u/s 44(3) |
| 6 | 3AE | Audit Report u/s 44(6)/51(7) |
| 7 | 3CG | Application for approval of scientific research programme u/s 45(3)(c) |
| 8 | 3CH | Order of approval of Scientific Research Programme u/s 45(3)(c) |
| 9 | 3CI | Receipt of payment for scientific research u/s 45(3)(c) |
| 10 | 3CJ | Report by prescribed authority to CCIT after approval of scientific research programme |
| 26 | 3CA, 3CB, 3CD | Audit report and statement of particulars u/s 63 |
| 32 | New Form | Audit report u/ss 46, 138, 139, 140(8), 141, 142, 143, 144 |
| 39 | 10E | Form for claiming relief u/s 157(1) |
| 41 | 10F | Information to be provided u/s 159(8) |
| 48 | 3CEB | Report from accountant u/s 172 relating to international transactions |
| 121 | 15G & 15H | Declaration for non-deduction of tax at source (15G/H) u/s 393(6) |
| 130 | Form 16 | TDS Certificate for Salary (Form 24Q) |
| 131 | Form 16A | TDS Certificate for Non-Salary (Form 26Q & 27Q) |
| 132 | Form 16B/16C/16D/16E | TDS Certificate (Form 26QB/QC/QD/QE) |
| 133 | Form 27D | TCS Certificate (Form 27EQ) |
| 138 | 24Q | Quarterly TDS Statement – Salary u/s 392 |
| 140 | 26Q | Quarterly TDS Statement – Non-Salary Residents u/s 393(1) |
| 141 | 26QB/QC/QD/QE | Challan-cum-statement for property transactions |
| 143 | 27Q | Quarterly TDS Statement – Non-Residents u/s 393(2) |
| 144 | 27EQ | Quarterly TCS Statement – Section 394 |
| 145 | 15CA | Information for remittance u/ss 393, 395, 397, 462 |
| 146 | 15CB | Certificate of accountant u/ss 393, 463 |
Old vs New — Structural Comparison
Income Tax Act, 1961 vs Income Tax Act, 2025
Old Structure IT Act 1961
Organisation
Fragmented across multiple distinct sections (192, 193, 194A, 194C, 194J, 206C…)
Total Sections
Multiple sections for various payment types
Salary
Section 192 (specific)
Non-Salary
Numerous sections by income type (194A, 194C, 194J…)
TCS
Section 206C (various sub-sections)
Complexity
High — scattered and difficult to navigate
New Structure IT Act 2025
Organisation
Unified and consolidated into a single, cohesive compliance system
Total Sections
Three main sections: 392 / 393 / 394
Salary
Section 392 (single dedicated section)
Non-Salary
Section 393 with structured tables (residents, non-residents, any person)
TCS
Section 394 (single, complete framework)
Complexity
Streamlined — single TDS engine, uniform TCS rule
Form Mapping — Key TDS/TCS Forms
| New Form No. | Corresponding Section (New Act) | Old Form No. | Corresponding Section (Old Act) | Corresponding Rule |
|---|---|---|---|---|
| 138 | 397(3)(b) | 24Q | 200(3) | Rule 31A |
| 140 | 397(3)(b) | 26Q | 200(3) | Rule 31A |
| 144 | 397(3)(b) | 27Q | 200(3) | Rule 31A |
| 121 | 393(6) | 15G & 15H | 197A(1), 197A(1A) & 197A(1C) | Rule 29C |
| 41 | 159(8) | 10F | 90(5) and 90A(5) | Rule 21AB |
| 145 | 393, 395, 397, 462 | 15CA | 195, 271-I | Rule 37BB |
| 146 | 393, 463 | 15CB | 195, 271J | Rule 37BB |
Challan Payment Tutorial
Step-by-step guide for TDS/TCS payment via Income Tax e-Filing Portal (Income Tax Act, 2025)
Portal URL: www.incometax.gov.in |
Navigate to: e-File → e-Pay Tax → + New Payment → Pay TDS/TCS
01
Access e-Pay Tax
- Log in to the Income Tax portal at www.incometax.gov.in
- Navigate to the e-File menu and select the e-Pay Tax tab
- Select Income-tax Act, 2025 and click Continue
02
Initiate New Payment
You will see options for Draft Challans, Generated Challans, Payment History, and Challan Status Inquiry (CSI).
- Click the + New Payment button
- The page will display various tax categories (Tax Year, Pay TDS/TCS, Outstanding Demand, etc.)
03
Select Payment Type
- Click on Pay TDS/TCS to proceed with generating challans
- This covers payments under Section 392 (Salary), Section 393 (Residents / Non-Residents), and Section 394 (TCS)
04
Provide Deductee Details
- Select the appropriate Tax Applicable (Major Head)
- Select the Residential Status of the deductees
05
Define Nature of Payment
- Choose the relevant section from the Description dropdown (this combines the Nature of Payment and Section Code)
- Enter the specific amounts for:
(a) Tax
(b) Surcharge
(c) Education Cess
- Click Add to include these details in the challan
06
Add Additional Charges
- Enter amounts for any applicable charges:
(d) Interest
(e) Late Fee (Sec 427)
(f) Penalty
(g) Others
- Click Continue
💡 Tip: You can initiate payments for multiple sections in a single process. Add each section individually before proceeding.
07
Verify and Save
- Review all entered amounts in the summary table (items 'a' through 'g')
- You may Save as Draft if you aren't ready to pay yet
- Or click Continue to proceed to payment selection
08
Payment Selection & Completion
- Choose your preferred Payment Mode from the available options (Net Banking, NEFT/RTGS, etc.)
- Review the Final Payment Preview
- Click Pay Now and complete the transaction using your selected method
✅ After payment: Download and save the generated challan receipt for your TDS/TCS return filing (Form 138 / 140 / 143 / 144). Quote the BSR Code & Challan Serial Number in your TDS statement.
Quick Reference — Section Codes for Challan
| Section Code | Nature of Payment | Section | Rate |
|---|---|---|---|
| SECTION 392 — SALARY | |||
| 1001 | Payment to Govt employees (other than Union Govt) | 392 | Slab Rates |
| 1002 | Payment to Employees other than Govt employees | 392 | Slab Rates |
| 1003 | Salary – Government employees | 392 | Slab Rates |
| 1004 | PF accumulated balance due to employee | 392(7) | 10% |
| SECTION 393(1) — RESIDENTS | |||
| 1005 | Commission / Brokerage – Insurance | 393(1)[1(i)] | 2% (Ind) / 10% (Others) |
| 1006 | Commission / Brokerage – Others | 393(1)[1(ii)] | 2% |
| 1008 | Rent – Plant / Machinery / Equipment | 393(1)[2(ii)D(a)] | 2% |
| 1009 | Rent – Land / Building / Furniture / Fittings | 393(1)[2(ii)D(b)] | 10% |
| 1011 | Transfer of capital asset under Sec 67(14) agreement | 393(1)[3(ii)] | 10% |
| 1012 | Compensation – compulsory acquisition (non-agri) | 393(1)[3(iii)] | 10% |
| 1013 | Income in respect of units / Mutual Funds | 393(1)[4(i)] | 10% |
| 1019 | Interest on Securities | 393(1)[5(i)] | 10% |
| 1020 | Interest other than securities – Senior Citizens | 393(1)[5(ii)D(a)] | 10% |
| 1021 | Interest other than securities – Others | 393(1)[5(ii)D(b)] | 10% |
| 1022 | Interest on other than securities (other sources) | 393(1)[5(iii)] | 10% |
| 1023 | Contractor payments – Individual / HUF | 393(1)[6(i)D(a)] | 1% |
| 1024 | Contractor payments – Others | 393(1)[6(i)D(b)] | 2% |
| 1026 | Fees for Technical Services (FTS) | 393(1)[6(iii)D(a)] | 2% |
| 1027 | Fees for Professional Services | 393(1)[6(iii)D(b)] | 10% |
| 1028 | Director Remuneration (non-salary) | 393(1)[6(iii)D(b)] | 10% |
| 1029 | Dividends (incl. preference shares) | 393(1)[7] | 10% |
| 1030 | Payment in respect of life insurance policy | 393(1)[8(i)] | 2% |
| 1031 | Purchase of any goods | 393(1)[8(ii)] | 0.1% |
| 1033 | Benefits / Perquisites (business or profession) | 393(1)[8(iv)] | 10% |
| 1035 | E-commerce payments / sales | 393(1)[8(v)] | 0.1% |
| 1037 | Transfer of VDA – Other than Individual / HUF | 393(1)[8(vi)] | 1% |
| 1038 | Transfer of VDA – Individual / HUF | 393(1)[8(vi) Note-6] | 1% |
| SECTION 393(3) — ANY PERSON (Lottery / Games / Cash) | |||
| 1058 | Lottery / Crossword / Card Game / Gambling winnings | 393(3)[1] | 30% |
| 1059 | Lottery / Card Game winnings (Note 2) | 393(3)[1 Note 2] | 30% |
| 1060 | Online Games winnings | 393(3)[2] | 30% |
| 1061 | Online Games winnings (Note 2) | 393(3)[2 Note 2] | 30% |
| 1062 | Winnings from horse race | 393(3)[3] | 30% |
| 1063 | Commission on lottery tickets | 393(3)[4] | 2% |
| 1064 | Cash withdrawal – Co-operative society | 393(3)[5(a)] | 2% |
| 1065 | Cash withdrawal – Other persons | 393(3)[5(b)] | 2% |
| 1066 | Payments out of NSS deposits | 393(3)[6] | 10% |
| 1067 | Partner salary / remuneration / commission / interest | 393(3)[7] | 10% |
| SECTION 394 — TAX COLLECTION AT SOURCE (TCS) | |||
| 1068 | Sale of alcoholic liquor for human consumption | 394(1)[1] | 2% |
| 1069 | Sale of tendu leaves | 394(1)[2] | 2% |
| 1070 | Sale of timber – forest lease | 394(1)[3] | 2% |
| 1071 | Sale of timber – other than forest lease | 394(1)[3] | 2% |
| 1072 | Sale of other forest produce (not timber / tendu) | 394(1)[3] | 2% |
| 1073 | Sale of Scrap | 394(1)[4] | 2% |
| 1074 | Sale of minerals – coal / lignite / iron ore | 394(1)[5] | 2% |
| 1075 | Sale of motor vehicle (> ₹10L) | 394(1)[6(a)] | 1% |
| 1076 | Sale of wrist watch (> ₹10L) | 394(1)[6(b)] | 1% |
| 1077 | Sale of art / antiques / paintings / sculpture (> ₹10L) | 394(1)[6(b)] | 1% |
| 1078 | Sale of collectibles – coins / stamps (> ₹10L) | 394(1)[6(b)] | 1% |
| 1079 | Sale of yacht / rowing boat / canoe / helicopter (> ₹10L) | 394(1)[6(b)] | 1% |
| 1080 | Sale of pair of sunglasses (> ₹10L) | 394(1)[6(b)] | 1% |
| 1081 | Sale of handbag / purse (> ₹10L) | 394(1)[6(b)] | 1% |
| 1082 | Sale of pair of shoes (> ₹10L) | 394(1)[6(b)] | 1% |
| 1083 | Sale of sportswear & equipment – golf kit / ski-wear (> ₹10L) | 394(1)[6(b)] | 1% |
| 1084 | Sale of home theatre system (> ₹10L) | 394(1)[6(b)] | 1% |
| 1085 | Sale of horse for horse racing / polo (> ₹10L) | 394(1)[6(b)] | 1% |
| 1086 | LRS Remittance – Education or Medical treatment (> ₹10L) | 394(1)[7(a)] | 2% |
| 1087 | LRS Remittance – Other purposes | 394(1)[7(b)] | 20% |
| 1088 | Overseas tour package – up to ₹10L | 394(1)[8(a)] | 2% |
| 1089 | Overseas tour package – exceeding ₹10L | 394(1)[8(b)] | 20% |
| 1090 | Use of parking lot / toll plaza / mine / quarry (business) | 394(1)[9] | 2% |
| 1091 | Use of parking lot / toll plaza / mine / quarry (Sl. 9 – II) | 394(1)[9] | 2% |
| 1092 | Use of parking lot / toll plaza / mine / quarry (Sl. 9 – III) | 394(1)[9] | 2% |
Summary Review
Consolidated overview of the three foundational legislative instruments for Tax Year 2026-27
Scope: This summary covers (1) the Income Tax Act, 2025 — the new consolidated direct tax statute; (2) the Income Tax Rules, 2026 — the procedural rules framed under the Act; and (3) the Finance Act, 2026 — the annual budget legislation that amends rates and provisions effective FY 2026-27.
01
Income Tax Act, 2025
Act No. 30 of 2025 · Effective from 1 April 2026 · Replaces Income Tax Act, 1961
Core Structure
A complete rewrite of the 1961 Act, consolidating 298 sections and numerous sub-sections into a modernised, simplified framework. The new Act uses structured Tables instead of scattered provisos, making it substantially easier to navigate.
Key Terminology Change
"Tax Year" replaces the dual terms "Previous Year" and "Financial Year". The "Assessment Year" concept is retained only for legacy purposes. This alone eliminates significant definitional confusion from the old Act.
TDS/TCS Consolidation
All TDS/TCS provisions, previously scattered across Sections 192–206CC, are unified into three sections: Section 392 (Salary), Section 393 (All Other Payments), and Section 394 (TCS). A single TDS engine replaces the fragmented old structure.
Income Tax Slabs (Old Regime)
Slab rates under the Act (Paragraph A, Part I-B of First Schedule) remain largely aligned with the earlier regime. Individual: Nil up to ₹2.5L, 5% (₹2.5–5L), 20% (₹5–10L), 30% (above ₹10L). Senior citizens (60+): Basic exemption ₹3L. Super seniors (80+): Nil up to ₹5L.
New Default Regime (Section 202)
Section 202 codifies the new tax regime as the default. Taxpayers must opt out to use the old regime. The new regime offers lower slab rates with minimal exemptions/deductions. Basic exemption under Sec 202: ₹4,00,000 for individuals.
Interest & Penalties
Failure to deduct TDS: 1% per month (Sec 398(3)(a)(i)). Failure to deposit after deduction: 1.5% per month (Sec 398(3)(a)(ii)). Late filing of TDS statement: ₹200/day, not exceeding total tax deductible (Sec 427). No PAN: Higher of 5%/20% or 2× rate (Sec 397(2)).
Section Structure: Old vs New
| New Section | Coverage | Old Sections Replaced | Form (New) | Form (Old) |
|---|---|---|---|---|
| 392 | Salary TDS | 192, 192A | Form 138 | 24Q |
| 393(1) | TDS – Resident payments | 193, 194, 194A–194S | Form 140 | 26Q |
| 393(2) | TDS – Non-resident payments | 195, 196A–196D | Form 144 | 27Q |
| 393(3) | TDS – Any person (lottery, games, cash) | 194B, 194BA, 194N, 194T | Form 140 | 26Q |
| 394 | Tax Collection at Source (TCS) | 206C | Form 143 | 27EQ |
| 395 | Lower / nil deduction certificate | 197 | — | — |
| 397(2) | Higher rate — no PAN | 206AA/206CC | — | — |
| 398 | Interest on delayed TDS/TCS | 201, 206C(7) | — | — |
| 427 | Late filing fee for TDS statements | 234E | — | — |
Form 121 (New 15G/15H) — Key Features
Section 393(6): Form 121 replaces old Forms 15G and 15H. Declarations can be filed in paper or electronic form. PAN is mandatory. Payer must allot a 26-character Unique Identification Number (UIN) to each declaration. Part B of Form 121 must be filed quarterly by the payer on the IT e-filing portal. Effective from 1 April 2026.
02
Income Tax Rules, 2026
G.S.R. 198(E) · Notified 20 March 2026 · Effective 1 April 2026 · 976 pages · Replaces IT Rules, 1962
Authority & Commencement
Notified by the Central Board of Direct Taxes (CBDT) under Section 533 of the Income-tax Act, 2025. The Rules came into force on 1 April 2026, replacing the Income-tax Rules, 1962 in their entirety. Framed as G.S.R. 198(E) dated 20 March 2026.
Form Renumbering
All legacy forms (24Q, 26Q, 27Q, 27EQ, 15G, 15H, 16, 16A, 15CA, 15CB etc.) are replaced with new numbered forms (138, 140, 143, 144, 121, 130, 131, 145, 146 etc.). The Rules contain Appendix III with all new Form formats.
TDS/TCS Procedural Rules
Rule 211: Procedure for Form 121 (15G/15H declarations) — UIN allotment, quarterly filing of Part B. Rule 219: Statement of deduction of tax. Rule 332: Powers of DG IT (Systems) to specify procedures. TDS deposit timelines unchanged: April–Feb within 7 days; March within 30 days.
Quarterly Filing Deadlines
Q1 (Apr–Jun): 31 July. Q2 (Jul–Sep): 31 October. Q3 (Oct–Dec): 31 January. Q4 (Jan–Mar): 31 May. Form 121 (15G/15H) quarterly: 7th of the month following quarter end. TDS certificates (Form 130/131): 15 June following the Tax Year.
Stock Exchange & Capital Market Rules
Rules 4–5 specify conditions for notification of recognised stock exchanges. SEBI approval, complete audit trail for 7 tax years, and monthly Form 1 submission to DG IT (Systems) are mandated. Rules align capital market compliance with the new Act's taxonomy.
UIN Structure (Rule 211)
Each Form 121 declaration requires a 26-character UIN comprising: (a) Sequence Number — "D" + 9 digits; (b) Tax Year — 6 digits (e.g., 202627); (c) TAN — 10 characters. Example:
D000000001202627MUMN12345A. Sequence resets to "1" each Tax Year per TAN.Key Rules and Their Subject Matter
| Rule No. | Subject | Old Rule (IT Rules, 1962) |
|---|---|---|
| Rule 3 | Dividends declaration & payment within India | Rule 3 |
| Rule 4–5 | Recognised stock exchange notification conditions | Rule 4 |
| Rule 6 | Period of holding of capital assets | Rule 8AA |
| Rule 7 | Zero coupon bond notification procedure | Rule 8D |
| Rule 8 | Period of stay for crew members of foreign-bound ships | Rule 126 |
| Rule 211 | Form 121 (15G/15H) — declaration procedure, UIN allotment, Part B filing | Rule 29C |
| Rule 219 | Statement of deduction of tax (TDS returns) | Rule 31A / 31AA |
| Rule 332 | Powers of DG IT (Systems) for procedural specifications | Rule 131 |
03
Finance Act, 2026
Act No. 4 of 2026 · Presidential Assent: 30 March 2026 · Sections 2–129 effective 1 April 2026
Structure & Chapters
Chapter I – Preliminary. Chapter II – Income-tax rates (both IT Act 1961 & IT Act 2025). Chapter III – Direct Tax amendments (IT Acts 1961 & 2025). Chapter IV – Foreign Assets of Small Taxpayers Disclosure Scheme, 2026. Chapter V – Indirect Taxes (Customs). Chapter VI – Miscellaneous (STT, Black Money Act, Finance Act 2025 corrections).
New Regime Slab Rates (IT Act 2025 – Sec 202)
For FY 2026-27 (Tax Year 2026-27): Nil up to ₹4,00,000 · 5% (₹4–8L) · 10% (₹8–12L) · 15% (₹12–16L) · 20% (₹16–20L) · 25% (₹20–24L) · 30% above ₹24L. Tax rebate under Section 237 makes income up to ₹12L effectively nil. For salaried individuals, standard deduction of ₹75,000 extends this to ₹12.75L.
TCS Rate Amendments — Section 394
Finance Act 2026, Section 85 amends Section 394 of IT Act 2025: Alcoholic liquor 1%→2%; Tendu leaves 5%→2%; Scrap 1%→2%; Coal/minerals 1%→2%; LRS education/medical 5%→2%; Overseas tour (a) & (b) clauses merged to flat 2% (up to ₹10L) and 20% (above ₹10L).
TDS Amendments — Section 393
Section 84 amends Section 393: Correction of Sl. No. 3 cross-reference. Cash withdrawal threshold extended to co-operative societies (Sl. No. 5) by including co-operative land mortgage banks. Motor Accident Claims Tribunal interest up to ₹50,000 exempted. Form 121 (15G/H) declaration can now be filed electronically with depositories (effective 1 April 2027) for units/securities/dividends.
Section 397 — No-PAN Higher Rate
Section 87 amends Section 397 (effective 1 October 2026): The higher-rate provision (no PAN) will not apply to (i) immovable property transactions under 393(1)[Sl. No. 2(i), 3(i) or 6(ii)]; (ii) VDA payers under 393(4)[Sl. No. 12]; (iii) resident individuals/HUF for immovable property consideration under 393(2)[Sl. No. 17]; and (iv) any person notified by the Central Government.
STT Rate Increases
Section 159 (amending Finance (No. 2) Act, 2004): Securities Transaction Tax (STT) rates increased: Sale of option in securities (both entries): 0.1% & 0.125% → 0.15% each. Sale of futures in securities: 0.02% → 0.05%. Effective 1 April 2026.
Foreign Assets Disclosure Scheme, 2026
Chapter IV introduces the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 — a voluntary disclosure window for residents holding undisclosed foreign assets. Applicable to residents and, in certain cases, non-residents who were residents when the asset was acquired. Date to be notified separately by Central Government.
Customs Amendments
Chapter V extends Customs Act coverage to Indian-flagged fishing vessels beyond territorial waters. Duty-free import of fish harvested outside Indian waters is permitted. Advance Ruling validity extended from 3 years to 5 years (section 28J). Penalties for non-payment of duty clarified as part of advance ruling determinations.
Black Money Act Amendments
Chapter VI (Part III) amends the Black Money Act, 2015: Sections 49 & 50 — the Act shall not apply to non-immovable assets where aggregate value does not exceed ₹20 lakh. Deemed insertion with effect from 1 October 2024 — provides relief to small taxpayers with minor undisclosed foreign assets.
Finance Act 2026 — Key Amendment Summary Table
| Section of Finance Act | Amends | Subject | Effective Date |
|---|---|---|---|
| Section 2 | IT Act 1961 — Rates | Income tax rates for AY 2026-27 (IT Act 1961 taxpayers) | 1 Apr 2026 |
| Section 3 | IT Act 2025 — Rates | Income tax rates for Tax Year 2026-27 (IT Act 2025 taxpayers) | 1 Apr 2026 |
| Section 4 | Sec 92CA (IT 1961) | Transfer pricing — 60-day computation clarification (retrospective) | 1 Jun 2007 |
| Section 5 | Sec 139 (IT 1961) | ITR filing due dates — revised Explanation 2 | 1 Mar 2026 |
| Section 35 | Sec 2 (IT 2025) | Definition of co-operative society; GIFT City group entity definitions | 1 Apr 2026 |
| Section 56 | Sec 202 (IT 2025) | New regime — amendment to sub-section (2)(a) | 1 Apr 2026 |
| Section 83 | Sec 379 (IT 2025) | Waiver of penalty — "imposed or imposable" clarification | 1 Apr 2026 |
| Section 84 | Sec 393 (IT 2025) | TDS corrections; Form 121 electronic filing via depositories (from 1 Apr 2027) | 1 Apr 2026 / 1 Apr 2027 |
| Section 85 | Sec 394 (IT 2025) | TCS rate revisions — alcoholic liquor, tendu, scrap, coal, LRS, tour packages | 1 Apr 2026 |
| Section 86 | Sec 395 (IT 2025) | Lower deduction certificate — new sub-section (6) for AO-level issuance | 1 Apr 2026 |
| Section 87 | Sec 397 (IT 2025) | No-PAN higher rate — carve-outs for immovable property, VDA, notified persons | 1 Oct 2026 |
| Section 88 | Sec 399 (IT 2025) | Late filing fee reference corrected to Sec 427(1) and (2) | 1 Apr 2026 |
| Section 130–129 | New Scheme | Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 | To be notified |
| Section 159 | Finance (No. 2) Act 2004 | STT rate increases for options and futures | 1 Apr 2026 |
| Section 160 | Black Money Act 2015 | ₹20L threshold exemption for small foreign assets (retrospective 1 Oct 2024) | 1 Oct 2024 |