New TDS Framework Under Income Tax Act, 2025: Structure, Sections and Compliance Roadmap

The Income Tax Act 2025, effective for TDS purposes from 1 April 2026, introduces a reorganised and streamlined structure for Tax Deducted at Source (TDS). While the legal architecture and section numbering undergo a major overhaul, the substantive TDS rates and monetary thresholds remain virtually unchanged from the existing Income Tax Act 1961.

This article explains, in practical terms, how the new regime works, which law applies during the transition phase, and what steps every assessee and deductor must take to remain compliant.

1. Big Picture: What Exactly Is Changing in TDS?

The reform is largely structural, not financial.

  • What is NOT changing?

    • TDS rates on salary, rent, professional fees, commission, etc.
    • Basic exemption limits / monetary thresholds for deduction.
    • Core principles of deduction at the time of credit or payment, whichever is earlier.

  • What IS changing?

    • The section numbers and grouping of TDS provisions.
    • The layout and presentation, shifting to a more table-based, consolidated format.
    • The return forms and challan-cum-statement formats used for filing and reporting.

In essence, the substance of TDS remains familiar, but the compliance wrapper—sections, forms, and references—has been modernised.

2. New Core Sections: Section 392 and Section 393

2.1 Section 392 – Centralised Provision for Salary TDS

Under the Income Tax Act 1961, salary TDS is governed by Section 192 (and related clauses like 192B, etc.). Under the Income Tax Act 2025, all salary-related TDS provisions are consolidated into one main provision, namely:

  • Section 392 – TDS on salaries

Key conceptual points:

  • It performs the same role as Section 192 / 192B under the 1961 Act.
  • The methodology of calculating TDS on salary (slab-wise, based on estimated income for the financial year) remains intact.
  • The rates and slabs continue as per existing law; only the reference section and placement in the Act have been updated.

For payroll teams and HR departments, this means:

  • From 1 April 2026, all salary TDS references in systems, documents and communications should point to Section 392.
  • Policy documents that currently mention Section 192 need to be revised to align with the new statutory reference.

2.2 Section 393 – Single Hub for Non-Salary TDS

Where the 1961 Act uses multiple TDS sections (from Section 192 to Section 194T and beyond) to cover various categories of payments, the 2025 Act consolidates these scattered provisions into a unified, tabular structure under:

  • Section 393 – TDS on payments other than salary

This section brings together several types of payments, such as:

  • Rent
  • Commission and brokerage
  • Professional and technical fees
  • Contract payments
  • And various other specified sums

The main improvements are:

  1. Consolidation: Instead of remembering separate sections like Section 194C, Section 194H, Section 194J, etc., deductors will refer to a single umbrella provision with clear tables.
  2. Tabular Format:
    • Nature of payment
    • Person responsible to deduct
    • Threshold limit
    • Rate of TDS
      are displayed in an easy-to-read tabular form.
  3. Reader-friendly design: The structure is intended to reduce confusion and make compliance easier for assessee-deductors, especially small and mid-sized businesses.