India’s tax landscape is undergoing its most significant overhaul since independence. The Income-Tax Act, 2025 – which replaces the Income-Tax Act, 1961 – is not merely a renumbering exercise. It is a comprehensive recodification designed to simplify and modernize Indian tax law, and one area where this change is immediately felt by every business, accountant, and payroll team is TDS (Tax Deducted at Source) and TCS (Tax Collected at Source).
If you have ever filed a TDS return, issued a TDS certificate, or challan under sections like 194C, 194J, or 206C, you need to be aware: Those section numbers no longer exist in the new Act. They have been replaced by a restructured framework under Sections 392, 393 and 394 – with new numeric codes from 1001 to 1092 replacing the old alphanumeric sections.
This blog is your ready-reckoner. We break down every key TDS and TCS mapping – section by section, rate by rate, threshold by threshold – so you can navigate the new Act with clarity and confidence.
Understanding the Big Picture: What Has Changed?
The 1961 Act used a scattered, alphanumeric section structure – Section 192, 192A, 194C, 194DA, 194O, 206C(1F) and so on. The 2025 Act has fundamentally consolidated this into three master sections:
- Section 392 — TDS on Salary and PF-related payments
- Section 393 — TDS on all other payments (residents and non-residents)
- Section 394 — TCS (Tax Collected at Source)
Within each of these sections, CBDT assigns numeric codes (1001 to 1092) to identify specific transaction types. These codes are what you will need to use going forward – in challans, TDS returns, and certificates.
Part I – TDS on Payments to Residents
1. Salary & Provident Fund Withdrawals
Salary TDS – one of the most routine compliance tasks for every employer – now sits under Section 392 of the 2025 Act.
| Payment Type | 1961 Act Section → 2025 Act Section | Rate | Threshold |
| Salary – Govt. Employees (Non-Union) | Sec 192 → Sec 392
– Code 1001 |
As per Slab | — |
| Salary – Non-Govt. Employees | Sec 192 → Sec 392
– Code 1002 |
As per Slab | — |
| PF Withdrawal (Recognised PF) | Sec 192A → Sec 392(7)
– Code 1004 |
10% | ₹50,000 |
Slab-based TDS on salary remains unchanged in approach. For PF withdrawals, the ₹50,000 threshold continues to apply – withdrawals below this remain exempt from TDS.
2. Rent, Commission & Brokerage
Rental income and commission structures are common in business transactions. Here is how they map:
| Payment Type | 1961 Act Section → 2025 Act Section | Rate | Threshold |
| Insurance Commission | Sec 194D → Sec 393(1) Sl.1(i) | Code 1005 | 2% | ₹20,000 |
| Commission / Brokerage | Sec 194H → Sec 393(1) Sl.1(ii) | Code 1006 | 2% | ₹20,000 |
| Rent – Plant & Machinery | Sec 194I → Sec 393(1)
Sl.2(ii) | Code 1008 |
2% | ₹50,000/month |
| Rent – Land / Building | Sec 194I → Sec 393(1)
Sl.2(ii) | Code 1009 |
10% | ₹50,000/month |
The differential rate between machinery (2%) and land/building (10%) rent continues under the new Act. The monthly threshold of ₹50,000 remains unchanged.
3. Property, Interest & Capital Markets
This cluster covers some of the most commercially significant payment types – property transactions, interest income, and distributions from capital market instruments.
| Payment Type | 1961 Act Section → 2025 Act Section | Rate | Threshold |
| Immovable Property Transfer | Sec 194IA/IC/LA →
Sec 393(1) Sl.3 | Code 1011/1012 |
1%–10% | ₹50L / ₹5L |
| Interest on Securities | Sec 193 → Sec 393(1)
Sl.5(i) | Code 1019 |
10% | ₹10,000 |
| MF / Business Trust / Inv. Fund Distributions | Sec 194K/LBA/LBB/LBC → Sec 393(1)
Sl.4 | Codes 1013–1018 |
10% each | — |
| Interest Other Than Securities (Senior Citizens) | Sec 194A → Sec 393(1) Sl.5(ii) | Code 1020–1022 | 10% | ₹10,000 |
| Interest Other Than Securities (Others) | Sec 194A → Sec 393(1) Sl.5(iii) | Code 1020–1022 | 10% | ₹50,000 |
The favorable higher threshold of ₹50,000 for senior citizens on non-security interest is retained. Capital market distributions covering mutual funds, business trusts, and investment funds are now neatly consolidated under a single schedule (Sl.4).
4. Contracts, Fees & Professional Services
This is arguably the most frequently encountered category for businesses making payments to vendors, contractors, and professionals.
| Payment Type | 1961 Act Section → 2025 Act Section | Rate | Threshold |
| Contract – Individual/HUF | Sec 194C → Sec 393(1)
Sl.6(i) | Code 1023 |
1% | ₹30,000 single / ₹1L aggregate |
| Contract – Others (Companies etc.) | Sec 194C → Sec 393(1)
Sl.6(i) | Code 1024 |
2% | Same as above |
| Professional / Technical Fees (Technical) | Sec 194J → Sec 393(1) Sl.6(iii) | Code 1026 | 2% | ₹50,000 |
| Professional Fees | Sec 194J → Sec 393(1) Sl.6(iii) | Code 1027 | 10% | ₹50,000 |
| Director Fees | Sec 194J → Sec 393(1) Sl.6(iii) | Code 1028 | 10% | ₹50,000 |
The critical distinction between 2% (technical services) and 10% (professional/director fees) under Section 194J is preserved. Businesses must continue to classify payments carefully to apply the correct rate.
5. Dividend, Goods, E-Commerce & Virtual Digital Assets (VDA)
This section covers newer payment categories that reflect the evolving digital and investment economy.
| Payment Type | 1961 Act Section → 2025 Act Section | Rate | Threshold |
| Dividend | Sec 194 → Sec 393(1)
Sl.7 | Code 1029 |
10% | Nil |
| Purchase of Goods | Sec 194Q → Sec 393(1) Sl.8(ii) | Code 1031 | 0.1% | ₹50 Lakhs |
| E-Commerce Operator | Sec 194O → Sec 393(1) Sl.8(v) | Code 1035 | 0.1% | Nil |
| Virtual Digital Asset (non-Indv./HUF) | Sec 194S → Sec 393(1) Sl.8(vi) | Code 1037 | 1% | Nil |
| Business Perquisite/Benefit | Sec 194R → Codes 1033/1034 | 10% | ₹20,000 |
| Life Insurance (taxable maturity proceeds) | Sec 194DA → Code 1030 | 2% | ₹1 Lakh |
Cryptocurrency and VDA payments remain taxable at 1%, with no minimum threshold for non-individual/non-HUF payors. E-commerce TDS at 0.1% also has no threshold — every payment processed through a digital platform is covered.
Part II — TDS on Payments to Any Person (Winnings, Cash Withdrawals & Partner Payments)
These provisions apply regardless of whether the recipient is a resident or non-resident.
| Payment Type | 1961 Act Section → 2025 Act Section | Rate | Threshold |
| Lottery / Card Games / Betting | Sec 194B → Sec 393(3)
Sl.1 | Code 1058 |
30% | ₹10,000/transaction |
| Online Game Winnings | Sec 194BA → Sec 393(3)
Sl.2 | Code 1060 |
30% | Net Winnings |
| Horse Race Winnings | Sec 194BB → Sec 393(3)
Sl.3 | Code 1062 |
30% | ₹10,000/transaction |
| Cash Withdrawal – Co-operative Society | Sec 194N → Sec 393(3)
Sl.5 | Code 1064 |
2% | ₹3 Crore |
| Cash Withdrawal – Others | Sec 194N → Sec 393(3)
Sl.5 | Code 1065 |
2% | ₹1 Crore |
| Payments to Partners | Sec 194T → Sec 393(3)
Sl.7 | Code 1067 |
10% | ₹20,000 |
The 30% rate on winnings is unchanged. Online gaming TDS (introduced in recent years under Sec 194BA) is now formally mapped under the new Act at 30% on net winnings – a provision that online gaming platforms must pay close attention to.
Part III — TDS on Payments to Non-Residents
Payments to non-residents involve specific sections that often attract higher withholding rates or treaty considerations.
| Payment Type | 1961 Act Section → 2025 Act Section | Rate | Threshold |
| Non-Resident Sportsman / Association | Sec 194E → Sec 393(2)
Sl.1 | Code 1039 |
20% | Nil |
| Foreign Currency Borrowing / LT Infra Bonds | Sec 194LC → Sec 393(2)
Sl.2 | Code 1040 |
5% | Nil |
| IFSC Listed Bonds (issued before 01-07-23) | Sec 194LC (IFSC) →
Code 1042 |
4% | Nil |
| IFSC Listed Bonds (issued after 01-07-23) | Sec 194LC (IFSC) →
Code 1043 |
9% | Nil |
| FII – Securities Income | Sec 196D → Sec 393(2)
Sl.15 | Code 1055 |
20% | Nil |
| Specified Fund – Securities Income | Sec 196DA → Sec 393(2) Sl.16 | Code 1056 | 10% | Nil |
| Any Other Sum (General Non-Resident) | Sec 195 → Sec 393(2)
Sl.17 | Code 1057 |
Rates in force | Nil |
For non-resident payments, the applicable rate may also be governed by a Double Taxation Avoidance Agreement (DTAA). In such cases, the beneficial treaty rate may apply, subject to the non-resident furnishing Tax Residency Certificate (TRC) and Form 10F.
Part IV — TCS: Tax Collected at Source (Section 394)
TCS moves entirely under Section 394 in the 2025 Act. Here is the complete mapping for key categories:
| Payment Type | 1961 Act Section → 2025 Act Section | Rate | Threshold |
| Forest Produce (Tendu Leaves, Timber, etc.) | Sec 206C(1) → Sec 394(1) | Codes 1069–1074 | 2% each | — |
| Scrap | Sec 206C(1) → Sec 394(1) | Codes 1069–1074 | 2% | — |
| Coal / Iron Ore / Lignite | Sec 206C(1) → Sec 394(1) | Codes 1069–1074 | 2% | — |
| High-Value Goods (Motor Vehicle, Art, Luxury) | Sec 206C(1F) → Sec 394(1)
Sl.6 | Codes 1075–1085 |
1% | Consideration > ₹10 Lakhs |
| LRS Remittance – Education / Medical | Sec 206C(1G) → Sec 394(1) Sl.7(a) | Code 1086 | 2% | Exceeds ₹10 Lakhs |
| LRS Remittance – Other Purposes | Sec 206C(1G) → Sec 394(1) Sl.7(b) | Code 1087 | 20% | Exceeds ₹10 Lakhs |
| Overseas Tour Package | Sec 206C(1G) → Sec 394(1)
Sl.8 | Code 1088 |
2% | — |
| Parking Lot / Toll Plaza / Mining Lease | Sec 206C(1C) → Sec 394(1)
Sl.9 | Codes 1089–1092 |
2% each | — |
LRS remittances for purposes other than education or medical treatment attract a steep 20% TCS. This applies to foreign portfolio investments, overseas travel (non-package), and other general remittances beyond ₹10 lakhs under the Liberalized Remittance Scheme. Banks and authorized dealers must collect this at the time of remittance.
What Does This Mean for Businesses and Tax Professionals?
For Payroll and HR Teams
Section 192 is now Section 392. PF withdrawal TDS (erstwhile 192A) is now under Section 392(7). If your payroll software or challan generation is hardcoded to old section numbers, it needs to be updated before filing TDS returns under the 2025 Act.
For Finance and Accounts Teams
Every vendor payment, professional fee, rent, or commission entry in your books needs to be mapped to the new numeric code. When generating Form 26Q or filing quarterly TDS returns, the section codes you enter must reflect the 2025 Act structure.
For CAs and Tax Professionals
The new numeric codes (1001–1092) will need to be used in TDS certificates (Form 16/16A), TDS returns, and challans. Some codes – specifically 1007 (Sec 194IB), 1010 (Sec 194IA-Individual), 1025 (Sec 194M) and 1036 (Sec 194S-Indv./HUF) – are assumed and not yet officially notified by CBDT. Monitor CBDT notifications closely before finalizing compliance using these codes.
For E-Commerce Operators and VDA Exchanges
TDS on e-commerce transactions (0.1%, Code 1035) and VDA transactions (1%, Codes 1037/1038) are now firmly placed in the new structure. Ensure your systems are updated to reflect the new section references in year-end reconciliation and Form 26Q filings.
Quick Reference: Key Rates at a Glance
| Payment Category | Rate | New Code |
| Salary (Govt. Employee) | As per Slab | 1001 |
| Salary (Non-Govt. Employee) | As per Slab | 1002 |
| PF Withdrawal | 10% | 1004 |
| Insurance Commission | 2% | 1005 |
| Commission / Brokerage | 2% | 1006 |
| Rent – Machinery | 2% | 1008 |
| Rent – Land / Building | 10% | 1009 |
| Property Transfer | 1%–10% | 1011/1012 |
| Interest on Securities | 10% | 1019 |
| MF / Trust Distributions | 10% | 1013–1018 |
| Interest (Senior Citizens) | 10% | 1020–1022 |
| Contract – Indv./HUF | 1% | 1023 |
| Contract – Others | 2% | 1024 |
| Technical Fees | 2% | 1026 |
| Professional / Director Fees | 10% | 1027/1028 |
| Dividend | 10% | 1029 |
| Purchase of Goods | 0.1% | 1031 |
| E-Commerce Operator | 0.1% | 1035 |
| Virtual Digital Asset | 1% | 1037/1038 |
| Lottery / Betting / Games | 30% | 1058/1060/1062 |
| Cash Withdrawal | 2% | 1064/1065 |
| Payments to Partners | 10% | 1067 |
| Non-Resident General | Rates in force | 1057 |
| LRS – Education/Medical | 2% TCS | 1086 |
| LRS – Other Purposes | 20% TCS | 1087 |
| High-Value Luxury Goods | 1% TCS | 1075–1085 |
Conclusion: Compliance in Transition – Act Now
The shift from the 1961 Act to the 2025 Act is not just a legislative formality. It demands immediate, practical action from every business, payroll system, accounting software, and tax professional in India.
What has changed is the structural address – the section number you quote, the code you enter, and the form reference you use. Getting this wrong, even unintentionally, could trigger defaults, notices, or interest liability.
Key action items for your organization:
- Update your TDS/TCS challan templates to reflect new section codes
- Brief your finance, accounts, and payroll teams on the mapping
- Ensure your tax software vendor has updated its section code database
- Consult a qualified Chartered Accountant before filing the first TDS return under the 2025 Act
Need Help Navigating the New Income-Tax Act, 2025?
FinPracto’s tax advisory team specializes in TDS/TCS compliance, payroll tax management, and cross-border taxation. Whether you need a compliance review, system update advisory, or ongoing TDS return filing support – we are here.