Streamlining of TDS Sections in the New Act
The Income-tax Act, 2025 (effective from 1 April 2026) has introduced a major structural cleanup of India's direct tax laws. To simplify compliance, dozens of separate sections (such as 194C, 194J, 194A, 194H) are consolidated under Sections 392 and 393. While section numbering has changed completely, tax rates and threshold limits remain mostly identical, with key exceptions like senior citizen thresholds and new partner remuneration rules.
Detailed TDS Comparison Table
Below is the comprehensive mapping of the nature of payment, tax rates, exemption limits, and sections between the old 1961 Act and the new 2025 Act:
| Nature of Payment | Act of 1961 Section | Act of 2025 Section | TDS Rate | Threshold / Exemption Limit | Remarks / Key Exemptions |
|---|---|---|---|---|---|
| Salary | Sec. 192 | Sec. 392 | Slab Rate | Basic Exemption Limit | Based on estimated taxable salary of the employee |
| Premature EPF Withdrawal | Sec. 192A | Sec. 392 | 10% | ₹50,000 | No TDS is applicable if service period exceeds 5 years |
| Interest on Securities | Sec. 193 | Sec. 393 Table 1(5)(i) | 10% | ₹10,000 | Certain Government securities are exempt from TDS |
| Dividend | Sec. 194 | Sec. 393 Table 1(7) | 10% | ₹10,000 | Dividends distributed to certain approved trusts are exempt |
| Bank/Post Office Interest | Sec. 194A | Sec. 393 Table 1(5)(ii) | 10% | ₹50,000 | Aggregated across all branches on an annual basis |
| Senior Citizen Interest | Sec. 194A | Sec. 393 Table 1(5)(ii) | 10% | ₹1,00,000 | Enhanced threshold under the new Act of 2025 |
| Other Interest | Sec. 194A | Sec. 393 Table 1(5)(iii) | 10% | ₹10,000 | Interest paid by entities other than banks/post offices |
| Lottery/Crossword Winnings | Sec. 194B | Sec. 393 Table 3(1) | 30% | ₹10,000 | Flat rate applied on total winnings |
| Online Gaming Winnings | Sec. 194BA | Sec. 393 Table 3 | 30% | Nil | TDS deducted on net winnings at year-end or withdrawal |
| Horse Race Winnings | Sec. 194BB | Sec. 393 Table 3(3) | 30% | ₹10,000 | Deducted on aggregate winnings from bookmakers |
| Contractor Payments | Sec. 194C | Sec. 393 Table 1(6)(i) | 1% / 2% | ₹30,000 single or ₹1,00,000 aggregate | 1% for Individual/HUF payees, 2% for others |
| Insurance Commission | Sec. 194D | Sec. 393 Table 1(1)(i) | 5% | ₹20,000 | Paid to resident insurance agents |
| Life Insurance Maturity Proceeds | Sec. 194DA | Sec. 393 Table 1(8)(i) | 2% | ₹1,00,000 | Deducted only on the income component of proceeds |
| NSS Withdrawals | Sec. 194EE | Sec. 393 Table 3(6) | 10% | Nil | Payments under National Savings Scheme |
| Lottery Ticket Commission | Sec. 194G | Sec. 393 Table 3(4) | 2% | ₹20,000 | Commission paid on stock or sale of lottery tickets |
| Commission/Brokerage | Sec. 194H | Sec. 393 Table 1(1)(ii) | 2% | ₹20,000 | Excludes brokerage on securities transactions |
| Rent – Land/Building/Furniture | Sec. 194-I | Sec. 393 Table 1(2)(i) | 10% | ₹6,00,000 p.a. | General rent payments by entities liable to tax audit |
| Rent by Individual/HUF | Sec. 194-IB | Sec. 393 Table 1(2)(ii) | 2% | ₹50,000 per month | Paid by individuals/HUF not liable to tax audit |
| Purchase of Immovable Property | Sec. 194-IA | Sec. 393 Table 1(3)(i) | 1% | Property value > ₹50 lakh | Buyer is responsible for deducting and depositing tax |
| Compensation on Land Acquisition | Sec. 194LA | Sec. 393 Table 1(3)(iii) | 10% | ₹5 lakh | Compulsory acquisition; agricultural land is exempt |
| Professional Fees | Sec. 194J | Sec. 393 Table 1(6)(iii) | 10% | ₹50,000 | Legal, medical, architectural, accounting, or CA fees |
| Technical Services Fees | Sec. 194J | Sec. 393 Table 1(6)(ii) | 2% | ₹50,000 | Fees for technical services or royalty for movies |
| Royalty | Sec. 194J | Sec. 393 Table 1(6)(iii) | 10% | ₹50,000 | General royalty (patents, copyrights, trademarks) |
| Mutual Fund Income | Sec. 194K | Sec. 393 Table 1(4)(i) | 10% | ₹10,000 | Income derived from mutual fund units |
| Securitisation Trust Income | Sec. 194LBC | Sec. 393 Table 1(4)(iv) | 25%/30% | Nil | Based on recipient's legal entity type |
| Contract/Professional (Indiv/HUF) | Sec. 194M | Sec. 393 Table 1(6) | 2% | ₹50 lakh | For personal payments by individuals not subject to audit |
| Cash Withdrawals | Sec. 194N | Sec. 393 Table 3(5) | 2% / 5% | ₹1 crore and above | Higher rate if taxpayer has not filed recent ITRs |
| E-commerce Transactions | Sec. 194O | Sec. 393 Table 1(8)(v) | 0.1% | ₹5 lakh | Resident participants on digital e-commerce platforms |
| Specified Senior Citizens | Sec. 194P | Sec. 393 Table 1(8)(iii) | As applicable | As prescribed | Designated bank computes tax; ITR filing waived |
| Purchase of Goods | Sec. 194Q | Sec. 393 Table 1(8)(ii) | 0.1% | ₹50 lakh | Buyer's annual turnover must exceed ₹10 crore |
| Benefit/Perquisite in Profession | Sec. 194R | Sec. 393 Table 1(8)(iv) | 10% | ₹20,000 | Non-cash benefits given in course of business/profession |
| Virtual Digital Assets (Crypto) | Sec. 194S | Sec. 393 Table 1(8)(vi) | 1% | ₹50,000 | Applicable on transfers of cryptocurrency/NFTs |
| Payments to Partners | Sec. 194T | Sec. 393 Table 3(7) | 10% | ₹20,000 | New provision on partner interest, salaries, commissions |
5 Major Changes Under Income-tax Act, 2025
1. Consolidation of TDS Provisions
To reduce tax code complexity, the Act reorganizes the sections. Salary, EPF, and related payments fall under Section 392, and all other deductions are consolidated in a unified layout under Section 393.
2. Simplified Structure
Taxpayers no longer have to navigate dozens of separate, standalone clauses. Instead, they will refer to structured, systematic tables under Section 393 which outline payments, rates, and thresholds.
3. No Significant Rate Hikes
The changes represent a structural simplification exercise rather than a tax increase. Nearly all interest rates, rent rates, and contractor rates have been kept exactly the same.
4. Higher Exemption for Senior Citizens
To support elderly taxpayers, the annual interest threshold for bank and post office deposits under the new Act has been increased to ₹1,00,000 (from ₹50,000).
5. New TDS on Partner Remuneration
A completely new section, formerly Section 194T and now covered under Section 393 Table 3(7), mandates that firms deduct 10% TDS on any salary, interest, bonus, commission, or remuneration paid to partner accounts exceeding ₹20,000 per year.
Stay Compliant under the New Tax Code
Need professional help setting up your payroll and partner payments to align with the new TDS rules of the Income-tax Act, 2025? Reach out to our partner CAs for expert advisory.
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Disclaimer:
The information provided in this article is intended for educational and general awareness purposes under the Income-tax Act, 2025. It does not constitute professional tax or legal advice. Readers are advised to consult a qualified Chartered Accountant or tax advisor before making decisions based on this text. The authors and the firm accept no liability for any errors or omissions.