Tax Deducted at Source, or TDS, is one of the most important compliance mechanisms under India's income-tax framework. It requires the payer to deduct tax at source from specified payments and deposit it with the government within the prescribed timelines.

With the Income-tax Act, 2025 coming into effect from 1 April 2026, tax professionals, businesses, employers and other deductors need to understand how the TDS framework is being reorganised.

One of the major changes is structural. Several TDS provisions that were previously spread across different sections of the Income-tax Act, 1961 are consolidated into a smaller number of provisions. The deck highlights Section 392(1) for salary TDS, Section 393(1) for non-salary TDS, and Section 394 for TCS.

Importantly, the presentation notes that rates and thresholds are largely unchanged, while the references and forms are being moved to the new framework.

Let's look at some of the most important TDS provisions every accounting and tax professional should know.

TDS Under the Old Act vs the Income-tax Act, 2025

The transition does not necessarily mean that every familiar TDS rate or threshold has changed.

The presentation maps several provisions from the Income-tax Act, 1961 to the new Act:

The deck also highlights some form changes:

• Form 16 → Form 130

• Form 26Q → Form 140

• Form 15G → Form 121

• Challan 281 → Form 141

The exact nature-of-payment and table codes under Section 393 should be verified against the official CBDT concordance before filing.

1. TDS on Purchase of Immovable Property

Under Section 194-IA, TDS applies when the sale consideration or stamp duty value is ₹50 lakh or more.

The buyer is required to deduct 1% TDS at the time of payment or credit, whichever is earlier, and deposit it against the seller's PAN.

Key points

• Threshold: ₹50 lakh

• TDS rate: 1%

• Deductor: Buyer

• Applicable provision under the new framework: Section 393(1) table for immovable property

This is particularly important for buyers of high-value residential and commercial properties, as the TDS obligation rests with the buyer.

2. TDS on Rent Paid by Individuals and HUFs

Under Section 194-IB, individuals and HUFs who are not subject to tax audit are required to deduct TDS on specified rent payments.

The standard TDS rate is 5% when monthly rent exceeds ₹50,000. The deduction is generally made once, in the last month of the tenancy or the financial year, as applicable.

Quick reference

Monthly rent: More than ₹50,000
TDS rate: 5%
Deduction: Once, at the applicable end point of the tenancy or financial year

3. TDS on Professional and Technical Services

Payments covered under Section 194J can have different TDS rates depending on the nature of the service.

For fees for technical services, the rate highlighted in the presentation is 2%.

Professional services, on the other hand, attract 10% TDS.

This distinction is important because incorrectly classifying a payment as professional services or technical services can result in the wrong rate being applied.

4. What Happens When the Deductee Does Not Furnish PAN?

PAN plays a critical role in TDS compliance.

Under Section 206AA, where the deductee fails to furnish PAN, tax is generally deductible at the maximum rate of 20%, subject to the applicable provisions.

The presentation notes that this higher-rate safeguard continues within the new TDS framework under Section 393.

Therefore, deductors should ensure that PAN details are collected and validated before processing payments subject to TDS.

5. TDS on Contractor Payments

Section 194C applies to specified payments made to contractors.

One important threshold is the ₹30,000 single-payment limit. Where a single contract payment does not exceed ₹30,000, TDS is generally not required on that payment.

However, looking only at individual invoices can be misleading.

Annual aggregate threshold

The presentation highlights an aggregate annual threshold of ₹1,00,000 for contract payments.

This means that even if no individual bill exceeds ₹30,000, the TDS requirement can arise once the relevant payments cross the annual threshold.

6. TDS on Bank Interest

Interest income is another important area of TDS compliance.

For bank interest under Section 194A, the threshold highlighted in the presentation is:

The higher threshold for senior citizens recognises their greater reliance on interest income.

7. TDS on Business Benefits and Perquisites

Section 194R covers certain benefits or perquisites arising from business or profession.

Where the aggregate value exceeds ₹20,000 in a year, TDS is applicable at 10%.

Examples can include business-related benefits such as:

• Free samples

• Gifts

• Sponsored trips

• Other business or professional perks

Businesses should therefore track non-cash benefits carefully rather than focusing only on conventional monetary payments.

8. TDS on Purchase of Goods

Section 194Q applies to specified purchases of goods where the buyer meets the prescribed turnover condition.

The presentation states that where a buyer's turnover exceeds ₹10 crore, TDS applies to purchases exceeding ₹50 lakh at a rate of 0.1%.

The provision is particularly relevant for businesses making high-value purchases.

The presentation also notes that this provision mirrors the TCS mechanism under Section 206C(1H), and where both obligations could otherwise apply, the buyer's TDS obligation prevails over the seller's TCS.

9. When Must TDS Be Deposited?

TDS compliance does not end with deduction.

The tax deducted must generally be deposited with the Central Government by the 7th day of the following month.

There is an important exception for TDS deducted during March. The presentation specifies that March deductions are generally required to be deposited by 30 April.

Remember

TDS deducted during the month → Deposit generally by the 7th of the next month

TDS deducted in March → Deposit by 30 April

Maintaining a monthly compliance calendar can help prevent missed deadlines.

10. TDS Certificates: Form 16 to Form 130

Form 16 is the familiar TDS certificate issued by an employer to an employee for salary deductions.

Under the Income-tax Act, 2025 framework presented in the deck:

Form 16 → Form 130

The certificate provides employees with a summary of salary paid and tax deducted.

For accounting and payroll teams, this is one of the form changes that needs to be incorporated into future compliance processes.

11. Quarterly TDS Statements: Form 26Q to Form 140

For non-salary TDS payments, Form 26Q has traditionally been used for quarterly reporting.

Under the new framework presented in the deck:

Form 26Q → Form 140

Tax professionals should update their compliance checklists and internal processes to account for the revised forms.

12. TDS on Lottery and Certain Winnings

Certain winnings from lotteries, crossword puzzles and card games attract a flat TDS rate of 30% under Section 194B.

The presentation also notes a ₹10,000 threshold, after which the flat rate applies.

This is different from regular income where tax may be calculated using applicable slab rates.

13. TDS on Online Gaming Winnings

Section 194BA deals with TDS on net winnings from online games.

The presentation states that TDS is deducted on net winnings credited to the user's account, at the time of withdrawal or at the end of the financial year, as applicable.

With online gaming transactions increasingly becoming digital and frequent, accurate tracking of winnings and withdrawals is essential.

14. TDS on Cash Withdrawals

Section 194N covers TDS on specified cash withdrawals from banks.

For a taxpayer who regularly files income-tax returns, the threshold highlighted in the presentation is ₹1 crore, beyond which 2% TDS applies on withdrawals.

For non-filers

The threshold can be significantly lower for taxpayers who do not regularly file their income-tax returns.

The presentation highlights a threshold of ₹20 lakh for non-filers, with a higher TDS structure of 2%/5% depending on the applicable level of withdrawal.

This makes return-filing status an important consideration when dealing with large cash withdrawals.

15. TDS by E-Commerce Operators

Section 194O requires e-commerce operators to deduct TDS on the gross amount of sales or services facilitated through their platforms.

The rate highlighted in the presentation is 1%.

The provision applies to transactions facilitated through the e-commerce platform, making accurate transaction-level records particularly important for operators.

16. TDS on Payments by Individuals and HUFs

Section 194M applies to certain individuals and HUFs making payments to contractors or professionals where the specified annual threshold is crossed.

The presentation highlights:

• Threshold: ₹50 lakh in a year

• TDS rate: 5%

This provision covers individuals and HUFs that may otherwise fall outside the regular contractor or professional TDS provisions because they are not subject to tax audit.

17. Form 15G and Form 15H

Taxpayers whose total income is below the taxable limit may be able to submit a declaration to the bank to request that TDS not be deducted on certain interest income, subject to the applicable conditions.

For non-senior citizens, the relevant declaration is Form 15G.

Under the new framework presented in the deck:

Form 15G → Form 121

Senior citizens use the equivalent Form 15H.

Key TDS Rates and Thresholds at a Glance

What Changes Under the Income-tax Act, 2025?

The biggest takeaway is that the transition involves restructuring and renumbering, rather than a complete overhaul of every TDS rate and threshold.

The deck's concluding message is that the rates, thresholds and compliance discipline largely continue, while taxpayers need to adapt to the new section numbers and forms.

For tax professionals, this means the transition should be approached as a compliance-mapping exercise.

Update these areas in your workflow:

1. Section references

2. TDS tables and codes

3. Forms

4. Compliance calendars

5. Accounting software configurations

6. Client checklists

7. Internal TDS review procedures

Common TDS Compliance Mistakes to Avoid

1. Looking only at individual invoices

Some provisions have both transaction-level and annual thresholds. Always track cumulative payments.

2. Applying the wrong TDS rate

Professional services and technical services can have different rates. Classification matters.

3. Ignoring PAN details

Missing PAN can trigger a significantly higher TDS rate.

4. Missing the deposit deadline

TDS deducted during the month generally needs to be deposited by the 7th of the following month, with the March exception.

5. Continuing to use outdated form references

With the transition to the Income-tax Act, 2025, professionals need to update their compliance documentation and processes.

6. Not checking the new codes

The presentation specifically recommends verifying the exact Section 393 nature-of-payment/table code against the official CBDT concordance before filing.

How Technology Can Simplify TDS Compliance

TDS compliance involves repetitive activities such as:

• Tracking payment thresholds

• Classifying transactions

• Calculating deductions

• Maintaining vendor records

• Monitoring cumulative payments

• Preparing compliance reports

• Tracking deadlines

• Maintaining supporting documentation

For accounting professionals handling multiple clients, performing these checks manually can become time-consuming and increase the risk of errors.

This is where a structured accounting workflow can help.

With tools such as AI-powered invoice processing, AI ledger mapping, billing management, automated reminders and integrated accounting workflows, accounting professionals can reduce repetitive work and spend more time on review and advisory activities.

TDS Compliance Checklist

Before closing your monthly TDS process, check:

☐ Correct nature of payment identified
☐ Applicable threshold checked
☐ PAN details verified
☐ Correct TDS rate applied
☐ Cumulative payments reviewed
☐ TDS deducted on time
☐ TDS deposited within the applicable deadline
☐ Required statement prepared
☐ TDS certificate requirements checked
☐ New Income-tax Act, 2025 form and section references verified
☐ Section 393 table/code checked against the official CBDT concordance

Frequently Asked Questions

What is the effective date of the Income-tax Act, 2025?

The presentation states that the Income-tax Act, 2025 is effective from 1 April 2026.

Which section covers non-salary TDS under the new Act?

Non-salary TDS provisions are consolidated under Section 393(1) in the framework presented in the deck.

What is the TDS rate on purchase of immovable property above ₹50 lakh?

The presentation states that the buyer deducts 1% TDS when the applicable ₹50 lakh threshold is met.

What is the TDS rate for technical services?

The rate highlighted for technical services under Section 194J is 2%, while professional services attract 10%.

When should monthly TDS generally be deposited?

TDS is generally required to be deposited by the 7th of the following month. TDS deducted in March has a separate deadline of 30 April.

What happens if PAN is not furnished?

The presentation states that tax is generally deductible at a maximum rate of 20% under the missing-PAN safeguard.