TDS After 1 April 2026: New Sections, TDS Codes, Rates & Filing Made Easy

TDS Rules Changed From 1 April 2026 – What You Need to Know

From 1 April 2026, the new Income-tax Act, 2025 has changed the way TDS provisions are arranged. Earlier, people could easily remember separate sections such as 192 for salary, 194C for contractor payments, 194J for professional fees and 194-IA for property purchase. Now, the TDS provisions have been reorganised mainly under Section 392 for salary and Section 393 for other TDS payments.

Simple rule: Salary TDS → Section 392. Other TDS → generally Section 393, but you must select the correct table and transaction code under that section.

Why this matters: A TDS payment can be successfully paid to the Government and still require correction if the transaction is reported under the wrong option. Therefore, correct payment and correct reporting must both be checked.

Important: The code is not just a number to remember. It tells the tax system what type of payment you are reporting. For the same broad payment category, there can be different codes depending on the recipient and nature of payment.

Easy way to remember: Don’t ask only “What is my TDS rate?” Ask “What payment am I making, who is receiving it, and which new code identifies this transaction?”

Simple rule: Do not select a rent TDS option just because you see the word “Rent”. First check who is paying, who is receiving, what is being rented and which TDS limit and rate apply.

Business Rent? Check GST RCM Too

TDS on rent and GST on rent are separate compliances. Paying TDS correctly does not automatically mean that your GST obligation is completed.

In particular, where a GST-registered business takes commercial immovable property on rent from an unregistered person, GST under the Reverse Charge Mechanism (RCM) may apply, subject to the applicable conditions and exclusions. This RCM provision for renting of immovable property other than residential dwelling was introduced with effect from 10 October 2024. Composition taxpayers were subsequently excluded from this specific RCM entry.

A Common Business Mistake

A business may deduct the correct TDS from the landlord’s rent every month and assume the rent compliance is complete. Later, the GST department may question the business about RCM GST on commercial rent where the RCM conditions were applicable.

This is why rent paid by a business should be checked from both Income-tax and GST angles before the first payment and periodically thereafter.

1. TDS: Is TDS applicable on this rent payment?
2. Correct code: Which Section 393 table and transaction code applies?
3. Landlord: Is the landlord registered or unregistered under GST?
4. Property: Is the property commercial/immovable property and is the rental service taxable?
5. RCM: If the notified RCM conditions apply, has the GST been calculated, paid and reported correctly?

Quick Memory Guide

Individual / HUF qualifying rent → 393(1) Table 2(i) → Code 1007 → 2%
Plant / machinery / equipment → 393(1) Table 2(ii).D(a) → Code 1008 → 2%
Land / building / furniture / fittings → 393(1) Table 2(ii).D(b) → Code 1009 → 10%
Business taking commercial property from an unregistered landlord → separately check GST RCM

Easy memory: Old 194C is now broadly found under Section 393(1), Table 6(i). But do not stop at selecting 393 — the contractor type and applicable code must also be checked.

The Common Error

A business may correctly identify a payment as “contractor TDS” but then select the wrong code because the contractor’s status was not checked. 1% and 2% are not interchangeable. The type of contractor has to be identified before selecting the code.

1. What is the actual work? Check the contract and invoice.
2. Who is the contractor? Individual/HUF or another type of entity?
3. Does the payment cross the applicable TDS threshold?
4. Which Section 393 table applies?
5. Which section code should be reported?
6. Is any lower/nil deduction certificate applicable?

Quick Memory Guide

Old 194C → New Section 393(1)
Contractor is Individual / HUF → Table 6(i).D(a) → Code 1023 → 1%
Contractor is other than Individual / HUF → Table 6(i).D(b) → Code 1024 → 2%

Professional Fees Below ₹50,000? TDS May Not Be Required

For professional fees covered by this provision, the ₹50,000 threshold is important. If the total amount covered by the threshold does not exceed ₹50,000 during the relevant financial year, TDS may not be required, subject to the applicable conditions.

So, do not automatically deduct 10% TDS simply because the payment is made to an accountant, auditor, advocate, consultant or other professional. First check the total professional fees paid or credited during the year.

Simple Example

Suppose your company’s accountant’s professional fees for the entire year are ₹45,000. If the payment remains within the applicable ₹50,000 threshold and all other conditions are satisfied, TDS under this provision would generally not be required.

If the professional fees later increase and cross the applicable threshold, the TDS requirement has to be checked from that point based on the rules applicable to the payment or credit.

Easy memory: Professional service → Code 1027 → 10%   |   Technical service → Code 1026 → 2%   |   Always check the ₹50,000 threshold before deducting.

Old 194H → New Section 393 → Code 1025
This generally covers commission or brokerage paid or credited to a resident, subject to the applicable conditions and threshold.

Check the ₹20,000 Threshold

TDS on commission or brokerage generally applies when the amount paid or credited, or likely to be paid or credited, during the relevant financial year exceeds ₹20,000, subject to the applicable rules.

Simple Example

If a business pays a sales agent ₹15,000 commission during the year and the applicable threshold is not crossed, TDS under this provision would generally not be required. If the commission crosses the applicable threshold, TDS has to be checked from the relevant payment or credit.

Easy memory: Commission / Brokerage → Old 194H → New Section 393(1) → Code 1025. Always check the ₹20,000 threshold and the nature of payment before deducting TDS.

Simple point: If your business pays interest to another person, check the recipient and type of interest before selecting the TDS code. Do not select the bank-interest code just because the payment is described as “interest”.

Easy memory: Salary payment → Section 392. There is no need to search among the many Section 393 transaction codes used for other payments.

Simple Example

If a company pays monthly salary to its employees, the employer should calculate the employee’s estimated taxable income for the year and deduct TDS accordingly. The calculation should be reviewed when there is a salary revision, bonus, change of tax regime or other major income adjustment.

Do Not Apply the Normal 1% Property TDS

The familiar 1% property TDS generally applies to a qualifying purchase from a resident seller. If the seller is an NRI, the transaction needs a separate check. Applying 1% without verifying the seller’s residential status can result in a major TDS shortfall.

Lower TDS Certificate Can Make a Major Difference

In many genuine cases, the seller’s actual taxable capital gain may be much lower than the amount on which TDS is initially calculated. The NRI seller can therefore consider applying for a lower or nil deduction certificate, where eligible, instead of allowing a large amount to remain blocked as TDS.

Do this before the property payment. Once a large amount has been deducted and deposited, recovering the excess can become a separate process.

Simple Example

Suppose a Bangalore buyer purchases a property for ₹1 crore from an NRI. The buyer should not simply deduct 1% as normally done for a resident seller. The NRI status, applicable rate, surcharge, cess and possibility of a lower deduction certificate should be checked before making the payment.

Easy memory: Resident seller → check the applicable property TDS provision and code.
NRI seller → do not use the normal 1% property TDS automatically. First check the NRI property-sale TDS rate and whether a lower/nil deduction certificate should be obtained.

Easy memory: Old Section 194-IA → New Section 393(1), Table 3(i) → 1% TDS.

Keep These Details Ready Before Filing

Property TDS is not simply about calculating 1%. The transaction details must also be correctly reported.

• Seller’s PAN, name and address
• Buyer details
• Complete property address
• Date of agreement and relevant transaction details
• Total sale consideration and applicable stamp-duty value
• Whether the payment is made in one payment or instalments
• For subsequent instalments, details of the earlier payment and previous acknowledgement

Correct reporting of these details helps ensure that the TDS is properly connected with the property transaction and seller’s PAN.

Property TDS Is Not Just a Payment

A common mistake is to think that once the 1% TDS is paid, the work is finished. If the wrong form, section, seller PAN, property details or instalment information is entered, the TDS may not be properly reflected against the seller. Correction can then become much more difficult than getting the original filing right.

Do Not Ignore the Stamp-Duty Value

Sometimes property transactions are shown at a value lower than the applicable stamp-duty / guidance value. This can create problems later. The Income-tax Department can compare the declared consideration with the stamp-duty value reported by the registration authorities and question the difference. Such gaps may affect both the buyer and seller and may lead to additional tax, interest or other consequences.

Simple advice: Do not structure the property value merely to reduce registration cost or TDS. Keep the sale consideration, stamp-duty value, TDS and property records properly aligned.

Simple Example

You purchase a Bangalore property for ₹80 lakh from a resident seller and pay ₹20 lakh as the first instalment. The TDS filing should not be treated as simply paying ₹20,000. The total property value, current instalment, seller PAN, property address, sale consideration and applicable stamp-duty value need to be correctly reported.

Our practical advice: If you are purchasing property and TDS is applicable, get the TDS calculation and Form 141 filing checked by a TDS professional before doing it yourself. A small mistake at the payment stage can turn into a tedious correction process later, particularly when the seller’s TDS credit does not reflect correctly.

1. TDS on Contractor / Work Payments

Earlier, contractor TDS was mainly remembered as Section 194C. For payments from 1 April 2026, the corresponding provision is under Section 393(1), Table 6(i).

What does this cover?

• Building and civil work contractors
• Labour contractors and job work
• Housekeeping and maintenance contracts
• Repair and other work contracts
• Supply of labour for carrying out work

The applicable rate and threshold depend on the nature of the contract and the status of the contractor. The new Act keeps the earlier rate and threshold structure, but the new Section 393 table/code must be selected correctly.

Easy memory: Old 194C → New Section 393(1), Table 6(i). For a normal business paying a contractor, check the contractor’s status and applicable threshold before selecting the code.

2. TDS on Rent

Rent TDS earlier involved sections such as 194-I and 194-IB. From 1 April 2026, rent TDS is organised under Section 393. The applicable table depends on who is paying the rent and the type of payment.

Simple Example

Suppose a Bangalore business pays monthly rent for its office. Before deducting TDS, check who is making the payment, monthly rent amount, nature of property, landlord PAN and the applicable Section 393 provision.

Rent TDS and GST RCM Are Two Different Things

If your business is paying rent, do not check only the TDS requirement. In applicable cases, GST under Reverse Charge Mechanism (RCM) may also arise on the rental payment. TDS and GST RCM are separate compliances, so both should be checked before making the payment.

This is particularly important for businesses taking commercial premises on rent, where GST RCM issues can later result in GST notices, interest and tax demands if the applicable liability was missed.

Do not select the TDS code only by searching “contractor” or “rent”. First identify the payer, payee, nature of payment and applicable threshold, then select the matching Section 393 table and code.

Old Section 197 → New Section 395(1)
The basic concept continues: where the recipient’s estimated income and tax position justify a lower or nil deduction, a certificate can be obtained specifying the rate at which TDS should be deducted.

When Can It Be Useful?

• Property sale by an NRI where the actual taxable capital gain is much lower than the amount on which TDS would otherwise be deducted.
• Large professional or business receipts where the normal TDS would result in excessive tax being deducted.
• Cases where the recipient expects little or no taxable income after considering eligible deductions, losses or other tax positions.
• Other eligible payments where the normal TDS rate does not reasonably reflect the recipient’s expected tax liability.

Simple Example – NRI Property Sale

An NRI sells a property for a substantial amount, but after considering the property’s purchase cost, eligible deductions and actual capital gain, the final tax liability may be considerably lower than the TDS that would otherwise be deducted. Applying for a lower TDS certificate before the payment can prevent a large amount of money from being unnecessarily blocked as TDS.

Do It Before the Payment

A lower TDS certificate is not something to arrange after the full TDS has already been deducted. If you know that a transaction is likely to result in excessive TDS, start the process before the payment or credit becomes due.

Want to understand the process? Read our simple guide on obtaining a lower deduction certificate:

Simple Guide to Lower Deduction Certificate →

Easy memory: Normal TDS rate too high → check Section 395(1) → apply for Lower / Nil TDS Certificate → obtain the certificate before payment → deduct TDS at the rate specified in the certificate.

Common Problems We See

• Wrong TDS section or code selected
• TDS paid but seller / recipient PAN not correctly reported
• Property TDS paid but seller details or property transaction details are missing
• TDS amount paid correctly but credit is not appearing in 26AS / AIS
• Wrong TDS appearing in your own AIS
• Property transaction or TDS details appearing with an incorrect or duplicate amount

What Should You Do?

First, check the TDS challan, Form 141 / relevant filing, PAN details and 26AS/AIS together. This helps identify whether the problem is with the payment, reporting, PAN or the deductor’s correction.

Once the actual error is identified, the appropriate TDS correction process can be taken up. Simply paying the TDS again is usually not the solution.

Wrong TDS Showing in Your AIS?

AIS should also be checked, particularly for property transactions and high-value payments. If a property purchase or sale is appearing for the wrong amount, twice the actual value, or does not match your records, do not ignore it. Such information can create questions later if the underlying transaction is not properly reconciled.

Where an AIS entry is incorrect, the transaction should be verified against the supporting documents and an appropriate AIS feedback / correction with the concerned reporting party should be pursued.

Do not leave an error because “the TDS is already paid”. A wrong payment or wrong reporting can still affect the recipient’s tax credit and your own AIS records. Identify the error early and correct the underlying TDS reporting.

Common Property TDS Mistakes

• Wrong Form 141 / TDS code selected
• Seller’s PAN entered incorrectly
• Seller details not properly reported
• Wrong property or instalment details entered
• TDS paid in excess or under the wrong transaction
• TDS paid correctly but seller’s 26AS does not show the credit

What About Excess TDS or Wrong PAN?

If excess TDS has been paid, or the payment has gone against the wrong PAN / wrong account, the remedy depends on the nature of the error. The challan, Form 141, PAN details and 26AS/AIS should first be checked before deciding whether a correction, refund or other adjustment process is required.

Important: Property TDS errors involving large amounts should be addressed quickly. The longer the mismatch remains, the more difficult it can become to reconcile the buyer’s payment with the seller’s TDS credit.

The safest rule: First identify the transaction, then identify the new Section 393 table and code, and only then make the TDS payment. If the transaction is unusual, high-value or involves an NRI, property or lower deduction, get the TDS checked before paying.