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TDS under sections 392 and 393 — a checklist for your accounts team

From 1 April 2026 the 194-series is gone. Rates are largely the same, but section codes are not — and returns using old codes are rejected.

TDS22 Sep 20262 min readBy the S.P.S. & Co. team

The new Income-tax Act has gathered TDS into three sections. For payments made on or after 1 April 2026:

  • Section 392 — TDS on salary (and EPF withdrawals), formerly 192 and 192A.
  • Section 393 — TDS on everything else, set out in tables: payments to residents, payments to non-residents, and payments by any person. This replaces 193, the whole 194 series and 195.
  • Section 394 — TCS, formerly 206C.

Challans and TDS returns now identify the payment by its section 393 entry and payment code, not by "194J" or "194C". A return for the 2026-27 quarters that uses an old section code will fail validation.

What did not change

The rates and thresholds set by the Finance Act, 2025 carried across. The ones businesses use most:

PaymentOld sectionRateTDS starts above
Professional fees194J10%₹50,000 a year
Technical services194J2%₹50,000 a year
Contractors194C1% individual / HUF, 2% others₹30,000 per payment or ₹1,00,000 a year
Rent — building or furniture194I10%₹50,000 a month
Rent — plant and machinery194I2%₹50,000 a month
Commission or brokerage194H2%₹20,000 a year
Interest from a bank194A10%₹50,000 a year (₹1,00,000 for seniors)
Partners' remuneration and interest194T10%₹20,000 a year

Without the payee's PAN, TDS is still the higher of 20% and twice the normal rate.

The transition

Payments up to 31 March 2026 stay under the old sections — including the January–March 2026 quarter, whose returns were filed in May 2026. Everything paid from 1 April 2026 uses the new ones. If you are correcting an old return, keep the old codes for it.

Checklist for your accounts team

  1. Ledger and vendor masters — map every TDS ledger and vendor in Tally or your ERP to its section 393 entry.
  2. Challans — use the new payment codes for tax deducted from April 2026.
  3. Returns — make sure your return software is updated for the new schema before the quarter's filing.
  4. Lower-deduction certificates — check whether certificates issued under the old Act have been re-issued or remain valid for the new period.
  5. Form 16 and 16A — certificates for the new period quote the new sections; old-period certificates keep the old ones.
  6. Deposit dates are unchanged — the 7th of the following month, and 30 April for March.
Which section, which rate?Look up any payment — the new section, the old one, the rate and the threshold.
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This article is general information based on the law as it stood on 22 Sep 2026. It is not advice for your situation — rules and dates change, and the right answer depends on your facts. Speak to us before acting on it.

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