What replaced Section 194C and 194J in the new Income Tax Act 2025?

From 1 April 2026, Section 194C (contractor payments) is replaced by TRACES payment codes 1023 (individual, 1%) and 1024 (company, 2%) under Section 393(1) of the Income Tax Act 2025. Section 194J (professional fees) is replaced by codes 1026 (technical services, 2%) and 1027 (professional fees, 10%). Rates and thresholds remain unchanged — only the section reference and TRACES code change. Using old codes like 194C or 194J in Tax Year 2026-27 returns will cause CPC rejection.

What is the new TDS return form replacing Form 26Q for Tax Year 2026-27?

Form 26Q (non-salary TDS quarterly return) is replaced by Form 140 under the Income Tax Act 2025, effective from Tax Year 2026-27. Similarly, Form 24Q (salary TDS return) is replaced by Form 138. Form 27Q (NRI TDS) is replaced by Form 144. The four challan-cum-statement forms 26QB/26QC/26QD/26QE are consolidated into unified Form 141. Using old form names for Tax Year 2026-27 transactions makes certificates and returns non-compliant.

What are the TDS rate cuts under the new Income Tax Act 2025?

Four TDS rate cuts have been made under the Income Tax Act 2025 effective 1 April 2026: (1) Commission/brokerage (old 194H, now Code 1006): reduced from 5% to 2%; (2) Individual/HUF rent (old 194IB, now Code 1007): reduced from 5% to 2%; (3) E-commerce operator TDS on seller payments (old 194O, now Code 1035): reduced from 1% to 0.1%; (4) Life insurance maturity payment (old 194DA, now Code 1020): reduced from 5% to 2%. All other TDS rates are unchanged.

Is Section 206AB (higher TDS for non-filers) applicable for Tax Year 2026-27?

No. Sections 206AB and 206CCA have been permanently deleted under the Income Tax Act 2025. From Tax Year 2026-27, deductors no longer need to check the ITR filing status of payees or apply higher TDS rates for non-filers. The only remaining higher-rate provision is Section 397(2) (equivalent of old 206AA) which mandates 20% TDS when PAN is not furnished.

What is the TRACES payment code for TDS on professional fees (old 194J)?

Under the Income Tax Act 2025, TDS on professional fees (CA, doctor, lawyer, architect) is reported using TRACES payment code 1027 (Section 393(1)) at 10%. Technical services, call centre operations, and film royalties use code 1026 at 2%. Director fees (non-salary) use code 1028 at 10% with no threshold. The old section 194J no longer exists as a standalone provision — use the new codes in Forms 138/140 from April 2026 onwards.

What replaced Form 15G and Form 15H under the new Income Tax Act 2025?

Forms 15G and 15H have been merged into a single unified Form 121 under the Income Tax Act 2025. Resident individuals below 60 (previously filed Form 15G) and senior citizens 60+ (previously filed Form 15H) now use Form 121 to declare income below the taxable limit and prevent TDS deduction on interest, rent, professional fees etc. Form 121 is not valid for salary, lottery winnings, VDA/crypto, or payments where TDS is mandatory regardless of income.

What is the new TDS rule on partner payments (Code 1067) for firms and LLPs?

Section 194T (introduced April 2025) is now consolidated into TRACES payment code 1067 under Section 393(3) of the Income Tax Act 2025. All partnership firms and LLPs must deduct TDS at 10% on salary, remuneration, bonus, commission, or interest paid to partners exceeding Rs 20,000 per year. TDS is deducted at the time of credit or payment (whichever is earlier), deposited by the 7th of the following month, and reported in Form 140 quarterly. Form 131 (was Form 16A) is issued to each partner.

🆕 Income Tax Act 2025 — Effective 1 April 2026 · Section 392 / 393

TDS Rate Finder India
Tax Year 2026-27 — New Payment Codes
Under Income Tax Act 2025

India's most comprehensive TDS rate finder for Tax Year 2026-27. The Income Tax Act 2025 replaces all old 194-series sections with 4-digit TRACES payment codes under Section 392 (salary) and Section 393 (all other payments). Rates mostly unchanged — but codes are completely new. Old section numbers on new returns = defective filing.

New 4-Digit TRACES Codes 1001–1067

Old 194-Series Cross-Reference

Rate Cuts: Commission + Rent

New Forms 138 / 140 / 141 / 144

206AB Deleted — No Filer Checks

50+ Payment Categories

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CRITICAL — From 1 April 2026: TDS returns (Q1 due 31 July 2026) must use new 4-digit payment codes (1001–1067) and new Form 140 (not old Form 26Q). Old codes like "194C", "194J" on new returns will be rejected by TRACES CPC. Update your Tally/Zoho/SAP/TDS software immediately.

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⚠️ Add 4% Health & Education Cess on salary TDS (Section 392) only. Other TDS sections: no cess at deduction stage. No surcharge on TDS deductions at source (except NRI/foreign payments). Rates are base rates — verify against Income Tax Act 2025 and CBDT notifications before filing. Q1 FY 2026-27 return (Form 140) due 31 July 2026.

Income Tax Act 2025 — New Architecture

The Big Change: 194-Series → Section 392 / 393 / 394

From 1 April 2026, the Income Tax Act 2025 replaces all 40+ individual TDS sections (192 to 194S) with just three consolidated sections. The underlying rates and thresholds are largely unchanged — but the section numbers and return forms are completely new. Using old codes in Tax Year 2026-27 returns = defective filing.

392

Salary TDS

Replaces old Sections 192 & 192A. Salary, EPF withdrawal.

Codes 1001–1004 · Form 138
Certificate: Form 130

393(1)

Resident Payments

Replaces 194A through 194T. All non-salary payments to residents.

Codes 1005–1038 · Form 140
Certificate: Form 131

393(2)

NRI / Foreign Payments

Replaces Section 195 and related NRI/foreign TDS sections.

Codes 1039–1057 · Form 144
Property: Form 141

393(3)

Special Payments

Winnings, cash withdrawals, NSS, partner payments. Replaces 194B/BA/BB/EE/N/T.

Codes 1058–1067 · Form 140
Lottery: Form 140

New Forms — Old Forms Discontinued for Tax Year 2026-27

Purpose	Old Form (ITA 1961)	New Form (ITA 2025)	Due Dates (unchanged)
Quarterly TDS return — Salary	24Q	Form 138	Q1: Jul 31 · Q2: Oct 31 · Q3: Jan 31 · Q4: May 31
Quarterly TDS return — Non-Salary Resident	26Q	Form 140	Same as above
Quarterly TDS return — Non-Resident / Foreign	27Q	Form 144	Same as above
Quarterly TCS return	27EQ	Form 143	Same as above
Property / Rent / VDA (Challan-cum-Statement)	26QB / 26QC / 26QD / 26QE	Form 141 (unified)	30 days from end of month
TDS certificate — Salary	Form 16	Form 130	By 15 June 2027 (for TY 2026-27)
TDS certificate — Non-Salary	Form 16A	Form 131	Within 15 days of return due date
Annual tax credit statement	Form 26AS	Form 149 / 168	Available on e-filing portal
Non-deduction self-declaration	Form 15G / Form 15H	Form 121 (unified)	Start of financial year / before payment

Finance Act 2025 / 2026 Rate Changes

TDS Rate Changes Effective Tax Year 2026-27

Most TDS rates are unchanged under the new Act. These are the specific rate cuts and new provisions that are different from FY 2025-26:

✂️ Commission / Brokerage — Code 1006
Old: 194H → New: 393(1)

Rate reduced from 5% → 2% effective 1 April 2026. Old 194H (individuals + companies) was 5%. Now uniformly 2% for all payees. Threshold: ₹20,000. Lottery commission (old 194G, now Code 1005) also 2%.

✂️ Individual / HUF Rent — Code 1007
Old: 194IB → New: 393(1)

Rate reduced from 5% → 2% (this cut was made in Oct 2024 but is now formally embedded in the 2025 Act). For individuals/HUFs not liable to tax audit paying monthly rent >₹50,000. Form 141 (was 26QC). No TAN needed.

✂️ E-Commerce Operator TDS — Code 1035
Old: 194O → New: 393(1)

Rate reduced from 1% → 0.1%. A 90% rate cut for platform sellers on Amazon, Flipkart, etc. Threshold ₹5L for resident individual sellers. Significant cash-flow improvement for e-commerce sellers.

✂️ Life Insurance Maturity — Code 1020
Old: 194DA → New: 393(1)

Rate reduced from 5% → 2% on maturity/survival benefit payments from non-exempt life insurance policies (premium >10% of sum assured). Threshold: ₹1,00,000. Relief for insurance policy holders.

🆕 Partner Payments — Code 1067
Old: 194T (Apr 2025) → New: 393(3)

Section 194T (introduced Apr 2025) now consolidated into Code 1067 under Section 393(3). 10% TDS on salary, remuneration, commission, bonus, or interest to partners >₹20,000/year. All firms + LLPs. File Form 140.

❌ Sections 206AB / 206CCA Deleted
No equivalent in new Act

Higher TDS for ITR non-filers permanently deleted. No need to check ITR filing status of payees. Section 397(2) (old 206AA) — 20% for no-PAN — continues. Significant compliance simplification for deductors.

❌ Section 194LD Deprecated
No new code assigned

Old Section 194LD (TDS on interest on bonds/government securities for FPIs and QFIs) has been deprecated entirely. No longer applicable from 1 April 2026. Check with CA for treatment of existing instruments.

🔄 Manpower Supply — Codes 1023 / 1024
Old: Disputed 194C vs 194J

The long-standing dispute on whether manpower supply is a works contract (194C) or technical service (194J) is explicitly resolved. Manpower supply is now Code 1023 (individual, 1%) / Code 1024 (company, 2%) — under the contractor provision.

Section 397(2) — Replaces 206AA

TDS Without PAN — Higher Rates (Section 397 of ITA 2025)

Section 397(2) of the Income Tax Act 2025 replaces the old Section 206AA. Rule: if payee fails to furnish PAN, deduct at the higher of the specified rate, twice the rate, or 20%. Exception for purchase of goods (Code 1031) and e-commerce (Code 1035): 5% applies instead of 20%.

⚠️ No-PAN TDS Rates — Section 397(2) [Old 206AA]

Code 1023/1024 — Contractor

Normal: 1%/2%

No PAN: 20%

Code 1026/1027 — Prof./Tech.

Normal: 2%/10%

No PAN: 20%

Code 1009 — Rent (Building)

Normal: 10%

No PAN: 20%

Code 1005 — FD Interest

Normal: 10%

No PAN: 20%

Code 1006 — Commission

Normal: 2%

No PAN: 20%

Code 1010 — Property Purchase

Normal: 1%

No PAN: 20%

Code 1031 — Goods Purchase

Normal: 0.1%

No PAN: 5%

Code 1035 — E-Commerce

Normal: 0.1%

No PAN: 5%

TDS Compliance — Tax Year 2026-27

TDS Compliance Process — Step-by-Step for Tax Year 2026-27

Update Software + Vendor Master

Update Tally/Zoho/SAP/CompuTDS to use new payment codes 1001–1067. Remap all vendor TDS configurations. Old section codes (194C, 194J) on returns from April 2026 = defective. Contact your software vendor to confirm update.

Obtain / Verify TAN

TAN is required for most TDS deductions. Not needed for property purchase (Code 1010, Form 141) or individual rent 193(1) (Code 1007, Form 141). TAXAJ handles TAN registration and TRACES registration.

Deduct at Correct Rate + Code

Identify correct TRACES payment code from the table above. Verify PAN of payee — no PAN = 20% under Section 397(2). Apply reduced rates for commission (2%), individual rent (2%), e-commerce (0.1%), LIC maturity (2%).

Deposit TDS by 7th of Next Month

Deposit TDS using Challan ITNS 281 (updated for new codes) by 7th of the following month. March TDS: deposit by 30 April. Late deposit: 1.5%/month interest (Section equivalent of old 201(1A)). Non-deduction: 1%/month.

File Quarterly Returns (New Forms)

Q1 (Apr–Jun): Form 138 + 140 by 31 July 2026. Q2 by Oct 31. Q3 by Jan 31. Q4 by May 31. Use new form numbers — old 24Q/26Q rejected for Tax Year 2026-27 transactions. File on TRACES portal using payment codes. TAXAJ files all returns.

Issue TDS Certificates (New Forms)

Issue Form 130 (salary, was Form 16) by 15 June following Tax Year. Issue Form 131 (non-salary, was Form 16A) within 15 days of return due date. Download from TRACES. Late issuance: ₹200/day. Ensure payee's Form 149/168 (new Form 26AS) reflects correct credit.

Complete Guide

TDS Under New Income Tax Act 2025 — Tax Year 2026-27 Explained

Tax Year 2026-27 marks the first full year under the Income Tax Act 2025, which came into force on 1 April 2026, replacing the Income Tax Act 1961. The most visible change for deductors is the complete elimination of the familiar 194-series TDS sections — Sections 194C, 194J, 194I, 194A, 194H, 194O, 194T, and all others no longer exist as standalone legal provisions. They have been absorbed into Section 392 (salary TDS), Section 393 (all other TDS payments), and Section 394 (TCS), with individual payment types identified by 4-digit TRACES payment codes (1001–1067).

The underlying TDS rates and thresholds are largely unchanged — this is a structural reclassification, not a tax rate overhaul. The key rate changes are: commission/brokerage cut from 5% to 2% (Code 1006), individual/HUF rent formalised at 2% (Code 1007), e-commerce operator TDS cut from 1% to 0.1% (Code 1035), life insurance maturity payment cut from 5% to 2% (Code 1020). The controversial Sections 206AB and 206CCA (higher TDS for ITR non-filers) have been permanently deleted — deductors no longer need to check the ITR filing status of payees before each deduction. The practical implications are significant: all TDS return forms change (24Q → Form 138, 26Q → Form 140, 27Q → Form 144, 26QB/QC/QD/QE → Form 141), Form 16 becomes Form 130, Form 16A becomes Form 131, and Form 15G/15H merge into Form 121. TAXAJ's CA and CS team handles complete TDS compliance under the new Income Tax Act 2025 — TAN registration, return filing (Forms 138/140/141/144), Form 130/131 certificates, and TDS notice responses.

FAQ

TDS FY 2026-27 — Most Asked Questions

From 1 April 2026, all old 194-series TDS sections are consolidated under Section 393 of the Income Tax Act 2025. Section 194C (contractor payments) is now under Section 393(1) with payment codes 1023 (individual, 1%) and 1024 (company, 2%). Section 194J (professional/technical fees) is now codes 1026 (technical, 2%) and 1027 (professional, 10%). Section 194I (rent) is now codes 1008 (machinery, 2%) and 1009 (building, 10%). All rates and thresholds remain the same — only the section reference and TRACES code change. Using old section codes in Tax Year 2026-27 returns will cause CPC rejection.

Under the Income Tax Act 2025, effective from Tax Year 2026-27: Form 24Q → Form 138 (quarterly salary TDS return); Form 26Q → Form 140 (quarterly non-salary resident TDS return); Form 27Q → Form 144 (NRI/non-resident TDS return); Form 27EQ → Form 143 (TCS return); Form 26QB / 26QC / 26QD / 26QE → Form 141 (unified challan-cum-statement for property, rent, goods, VDA); Form 16 → Form 130 (salary TDS certificate); Form 16A → Form 131 (non-salary TDS certificate); Form 15G / 15H → Form 121 (non-deduction self-declaration). TAXAJ files all new-form TDS returns.

The TDS rate on professional fees (doctor, CA, lawyer, architect, engineer) remains 10% under the new Act — payment code 1027 in TRACES (Section 393(1)[Sl.6(iii)]). For technical services, call centre operations, film royalties (distribution/exhibition) — rate remains 2%, code 1026. Director fees (non-salary) continue at 10%, code 1028 — no threshold. The threshold of ₹50,000 per FY per payee (raised in FY 2025-26) continues. No PAN → 20% under Section 397(2).

Yes. This is one of the notable rate cuts. Commission and brokerage payments (old Section 194H, now Code 1006) have been reduced from 5% to 2% effective 1 April 2026 under the Income Tax Act 2025. Lottery commission (old Section 194G, now Code 1005) is also 2%. Threshold: ₹20,000. The 2% rate applies to both individuals/HUF and companies/firms. Directors' commission paid as non-salary remuneration continues to fall under professional fees (Code 1028) at 10%.

No. Sections 206AB and 206CCA are permanently deleted under the Income Tax Act 2025. They are not carried over into the new Act. Deductors no longer need to: (1) check payee's ITR filing status on the TRACES Compliance Check portal, (2) apply double-rate TDS for non-filers, or (3) maintain ITR non-filer lists. The only remaining "higher rate" provision is Section 397(2) (old 206AA) — 20% TDS when PAN is not furnished. This is a significant compliance simplification for all deductors from Tax Year 2026-27.

Q1 Tax Year 2026-27 (April–June 2026) TDS return is due 31 July 2026. This must be filed using the new Forms 138 (salary) and 140 (non-salary) with new 4-digit payment codes — not old 24Q/26Q. TDS deposited for April, May, June must use new TRACES payment codes (1001–1067) from 1 April 2026. If TDS was deducted in March 2026, file under old 26Q/24Q (Q4 FY 2025-26, due 31 May 2026). Transition rule: date of payment or credit (whichever is earlier) determines which Act applies. Late filing: ₹200/day under Section 407 (old Section 234E). TAXAJ files TDS returns on time.

TDS on purchase of immovable property (old Section 194-IA) is now reported with payment code 1010 under Section 393(1) of the Income Tax Act 2025. Rate: 1% on purchase consideration ≥₹50 lakh. The buyer files the combined challan-cum-statement in new Form 141 (replaces old Form 26QB) within 30 days from the end of the month. No TAN required — buyer's PAN sufficient. No PAN from seller → 20% TDS under Section 397(2). TAXAJ assists buyers with Form 141 filing.

The functionality continues but under a new form number. Forms 15G and 15H have been merged into Form 121 under the Income Tax Act 2025. Individuals below 60 (previously Form 15G) and senior citizens 60+ (previously Form 15H) now file the unified Form 121 to declare income below the taxable threshold and prevent TDS deduction. Form 121 is not valid for salary (Codes 1001–1003), lottery winnings, VDA, or payments where TDS is mandatory regardless of income. The process and eligibility criteria remain the same.

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Income Tax Act 2025 explainers, new TDS payment codes, compliance deadlines — weekly Hinglish reels for CAs, accountants, and business owners navigating the new Act.

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TAXAJ provides TDS compliance under new Income Tax Act 2025 across India — Delhi · Bangalore · Mumbai · Goa · Bihar · All States

TDS Rate Finder IndiaTax Year 2026-27 — New Payment CodesUnder Income Tax Act 2025

The Big Change: 194-Series → Section 392 / 393 / 394

New Forms — Old Forms Discontinued for Tax Year 2026-27

TDS Rate Changes Effective Tax Year 2026-27

✂️ Commission / Brokerage — Code 1006Old: 194H → New: 393(1)

✂️ Individual / HUF Rent — Code 1007Old: 194IB → New: 393(1)

✂️ E-Commerce Operator TDS — Code 1035Old: 194O → New: 393(1)

✂️ Life Insurance Maturity — Code 1020Old: 194DA → New: 393(1)

🆕 Partner Payments — Code 1067Old: 194T (Apr 2025) → New: 393(3)

❌ Sections 206AB / 206CCA DeletedNo equivalent in new Act

❌ Section 194LD DeprecatedNo new code assigned

🔄 Manpower Supply — Codes 1023 / 1024Old: Disputed 194C vs 194J

TDS Without PAN — Higher Rates (Section 397 of ITA 2025)

⚠️ No-PAN TDS Rates — Section 397(2) [Old 206AA]

TDS Compliance Process — Step-by-Step for Tax Year 2026-27

Update Software + Vendor Master

Obtain / Verify TAN

Deduct at Correct Rate + Code

Deposit TDS by 7th of Next Month

File Quarterly Returns (New Forms)

Issue TDS Certificates (New Forms)

TDS Under New Income Tax Act 2025 — Tax Year 2026-27 Explained

TDS FY 2026-27 — Most Asked Questions

TDS, TAN & Tax Compliance at TAXAJ

TAN + TDS Return Filing (Form 140)

ITR Filing + TDS Credit

LLP / Firm TDS (Code 1067)

NRI TDS — Form 144 (Sec 393(2))

TDS Default / Notice Reply

Excess TDS Refund (ITR)

Company TDS Compliance

GST + TDS Filing

Capital Gains Tax Filing

MCA Compliance

📱 Follow @taxajca on Instagram

TDS Compliance Under New IT Act 2025

TDS Rate Finder India
Tax Year 2026-27 — New Payment Codes
Under Income Tax Act 2025

✂️ Commission / Brokerage — Code 1006
Old: 194H → New: 393(1)

✂️ Individual / HUF Rent — Code 1007
Old: 194IB → New: 393(1)

✂️ E-Commerce Operator TDS — Code 1035
Old: 194O → New: 393(1)

✂️ Life Insurance Maturity — Code 1020
Old: 194DA → New: 393(1)

🆕 Partner Payments — Code 1067
Old: 194T (Apr 2025) → New: 393(3)

❌ Sections 206AB / 206CCA Deleted
No equivalent in new Act

❌ Section 194LD Deprecated
No new code assigned

🔄 Manpower Supply — Codes 1023 / 1024
Old: Disputed 194C vs 194J