28 Oct New Income-tax Act 2025: TDS Sections 392 & 393 Explained

New Income-tax Act 2025: TDS Sections 392 & 393 Explained

The Income-tax Act, 2025 came into effect on 1 April 2026, introducing a reorganised structure for several income tax provisions, including Tax Deducted at Source (TDS).

For employers, businesses, accountants and finance teams, one important change is the consolidation of TDS provisions into Sections 392 and 393. Understanding the new section references and transition rules can help businesses maintain accurate records and reduce errors while preparing TDS statements.

This guide explains the key changes, what they mean for businesses and the practical steps to review your TDS compliance.

What Is the Income-tax Act, 2025?

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 for the new tax framework effective from 1 April 2026.

The new Act reorganises and simplifies the presentation of several provisions. TDS obligations continue, but businesses must identify the applicable provision under the Act governing the relevant payment or credit.

The transition does not mean that every tax rate, threshold or compliance requirement should be assumed to have changed. Each transaction should be checked against the applicable provisions, tables, rules and amendments.

1. Section 392: TDS on Salary

Section 392 of the Income-tax Act, 2025 covers tax deduction at source on salary payments.

Employers and payroll teams should review their payroll calculations, employee declarations and applicable tax provisions for the new tax year.

Practical steps include:

• Reviewing salary TDS calculations under the applicable provisions.
• Updating payroll software and internal section references.
• Checking employee income and deduction information relevant to tax computation.
• Maintaining accurate salary and TDS records.

For salary payments made from April 2026 onwards, employers should ensure their processes reflect the provisions applicable under the new Act.

2. Section 393: TDS on Other Specified Payments

Section 393 brings together TDS provisions for other specified payments in a structured, tabular format.

Depending on the transaction and the payee, the section covers categories such as:

• Payments to contractors and subcontractors.
• Professional and technical service fees.
• Rent payments.
• Commission or brokerage.
• Certain property-related payments.
• Interest, dividends and other specified payments.

Section 393 contains separate tables for different payee categories and payment types. The applicable provision, rate and threshold depend on the nature of the payment, the payee and the relevant conditions.

For this reason, businesses should not use a single section reference for every TDS transaction.

3. What Happens to the Old TDS Section Numbers?

Under the Income-tax Act, 1961, TDS provisions appeared across sections such as 192, 194C, 194J and other related provisions.

Under the Income-tax Act, 2025, salary TDS is covered by Section 392, while other specified TDS payments are addressed in Section 393.

The new structure consolidates the provisions rather than automatically changing every underlying rate or threshold.

For applicable payments or credits from 1 April 2026, businesses should identify the relevant new section and table entry rather than automatically copying an old section reference into their TDS reporting.

Using an incorrect section reference may cause processing or validation errors and could require a correction statement.

4. Which Act Applies During the Transition?

The relevant Act depends on the timing of the transaction.

For TDS purposes, the Income Tax Department explains that the earlier of the event of credit or payment is generally relevant to determining which Act applies.

• If the relevant earlier event occurred on or before 31 March 2026, the Income-tax Act, 1961 generally governs that TDS obligation.
• If the relevant earlier event occurred on or after 1 April 2026, the corresponding provisions of the Income-tax Act, 2025 generally apply.

For example, if professional fees were credited in the books in March 2026 but paid in April 2026, the earlier credit event generally means the old Act applies to that obligation.

The appropriate treatment should be checked against the facts and applicable provisions, particularly for transactions spanning March and April 2026.

5. Have TDS Rates and Thresholds Changed?

The Income Tax Department states that the consolidation of TDS provisions is a simplified presentation and does not, by itself, represent a change in TDS rates or tax policy. The applicable rates and monetary thresholds have generally been retained.

However, businesses should not assume that every transaction has identical treatment without verification. The precise category, threshold, rate, payee type, exceptions and any amendments must be reviewed under the current provisions.

For transaction-specific checks, consult the latest official TDS rate tables and applicable Finance Act amendments.

6. What Should Businesses Do Now?

Businesses, employers and accounting teams should review their TDS procedures and make the following checks:

Update payroll and accounting systems: Ensure the relevant new section references are available in payroll and accounting workflows.

Review vendor payments: Identify whether contractor payments, professional fees, rent, commissions and other specified payments require updated section references.

Check the transaction date: Determine the relevant credit or payment date to establish which Act governs the obligation.

Verify the applicable table entry: Check the nature of the payment, the payee category, the threshold and the rate.

Review TDS statements: Ensure section references are correct before filing statements to reduce the risk of processing errors.

Maintain documentation: Keep invoices, payment records, deduction workings and supporting documentation organised for future reference.

Need Help With TDS Compliance?

Understanding the new section references is an important part of managing tax compliance under the Income-tax Act, 2025. Businesses should review their transactions and internal systems rather than relying solely on the old section numbers.

CA Mohit Sharma provides professional guidance on TDS compliance, payroll-related tax matters, tax documentation and business tax requirements.

For assistance with TDS compliance and related tax matters, contact:

CA Mohit Sharma — Chartered Accountant

Phone: 8826980093

Official Resources

• Income Tax Department — TDS Compliance FAQs
• Income Tax Department — Tax Payments FAQ
• Income Tax Department — Current TDS Rates

Disclaimer: This article provides general information and is not a substitute for professional tax advice. TDS obligations depend on the transaction, timing, payee category, applicable provisions and current amendments. Verify the relevant law and official guidance before deducting tax or filing a statement.