Income‑Tax Act, 2025: TDS & TCS Provisions
Introduction
The New Income‑Tax Act, 2025 consolidates and re‑structures the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) framework that previously sat across multiple provisions (notably Chapter XVII of the older Act). The text below summarizes the re‑organized scheme, highlights notable changes, and provides a ready referencer mapping from the old sections to the new sections for quick compliance.
Scheme of the New Act
- Section 393(1): TDS on payments made to Residents.
- Section 393(2): TDS on payments made to Non‑Residents.
- Section 393(4): Payments where no deduction of tax is required.
- Lower/Nil deduction certificates: Expanded scope, with certificates for nil or lower rate applicable across more payment types; corresponding compliance is addressed under the new framework.
- Procedural timelines: Certain collection/deduction timings have been pre‑poned (e.g., to the time of debiting the buyer’s account or receipt, whichever is earlier) to align with new compliance flows.
Terminology: The New Act groups payers into categories (including a defined “Specified Person” class versus “Any Person”), streamlining thresholds and rates under unified tables referenced by Section 393.
Significant Changes (Highlights)
- Section 392 – Salary & accumulated balances: Clarifications to coverage and thresholds (including a noted ₹50,000 figure for certain payments) within salary‑linked provisions.
- Section 393 – Other payments: Re‑framed into consolidated tables for residents and non‑residents, with carve‑outs and thresholds made explicit for the payer category.
- Lower TDS deduction certificate – Scope expanded: Now extends beyond interest on securities; certificates can provide nil or lower rate relief across a broader set of payments.
- Commission/Brokerage (194H) vs Advertisement (194J) – Streamlined: Advertising services are clarified as professional services, removing earlier overlaps in treatment.
- Rent – Definition streamlined: Coverage now explicitly references certain properties (e.g., land appurtenant to factory buildings) and aligns with linked provisions (e.g., specified agreements under 194‑IC).
- TCS on motor vehicles > ₹10 lakh – Timing updated: Collection aligned to the time of receipt with earlier timing triggers for non‑cash modes, improving procedural clarity.
- Interest income: Distinctions drawn between interest on securities (old 193) and other interest (old 194A); certain aspects now restricted to banking companies under the mapped tables.
- TDS on specific cash amounts: Cash‑linked triggers reorganized (including interaction with post offices and banking channels) to reduce ambiguity.
Ready Referencer: Sections Applicable for TDS/TCS (Old → New)
A. Core TDS Sections (192 to 196D)
| Old Section | Description | New Act Section(s) |
|---|---|---|
| 192 | Salary | 392 |
| 192A | PF withdrawal | 392(7) |
| 193 | Interest on securities | 393(1) Table 5(i); 393(4) Table 6 |
| 194 | Dividends | 393(1) Table 7; 393(4) Table 10 |
| 194A | Interest (other than securities) | 393(1) Table 5(ii),(iii); 393(4) Table 7 |
| 194B | Lottery winnings | 393(3) Table 1 |
| 194BA | Online gaming winnings | 393(3) Table 2 |
| 194BB | Horse race winnings | 393(3) Table 3 |
| 194C | Contractors payments | 393(1) Table 6(i); 393(4) Table 8 |
| 194D | Insurance commission | 393(1) Table 1(i) |
| 194DA | Life insurance policy proceeds | 393(1) Table 8(i) |
| 194E | Payments to NR sportsmen | 393(2) Table 1 |
| 194EE | NSS deposits | 393(3) Table 6 |
| 194F | Repurchase of units | Omitted (already omitted in 2024) |
| 194G | Lottery ticket commission | 393(3) Table 4 |
| 194H | Commission/Brokerage | 393(1) Table 1(ii); 393(4) Table 1 |
| 194‑I | Rent | 393(1) Table 2(ii); 393(4) Table 2 |
| 194‑IA | Transfer of immovable property | 393(1) Table 3(i) |
| 194‑IB | Rent by certain individuals/HUF | 393(1) Table 2(i) |
| 194‑IC | Joint development agreement | 393(1) Table 3(ii) |
| 194J | Professional / Technical fees | 393(1) Table 6(iii); 393(4) Table 9 |
| 194K | Income from units | 393(1) Table 4(i); 393(4) Table 4 |
| 194L | Compensation for compulsory acquisition (old) | Omitted |
| 194LA | Compensation for immovable property | 393(1) Table 3(iii); 393(4) Table 3 |
| 194LB | Interest from infrastructure debt funds | 393(2) Table 5 |
| 194LBA | Income from units of business trust | 393(1) Table 4(ii); 393(2) Tables 6 & 7; 393(4) Tables 5,13 |
| 194LBB | Income of investment funds | 393(1) Table 4(iii); 393(2) Table 8; 393(4) Table 14 |
| 194LBC | Securitisation trust income | 393(1) Table 4(iv); 393(2) Table 9 |
| 194LC | Interest from Indian company (foreign borrowings) | 393(2) Tables 2,3,4 |
| 194LD | Interest on Government securities / bonds | Omitted |
| 194M | Payments by certain Individuals/HUFs | 393(1) Table 6(ii) |
| 194N | Cash withdrawals | 393(3) Table 5; 393(4) Table 18 |
| 194‑O | E‑commerce payments | 393(1) Table 8(v); 393(4) Table 11 |
| 194P | TDS for specified senior citizens | 393(1) Table 8(iii) |
| 194Q | Purchase of goods | 393(1) Table 8(ii) |
| 194R | Perquisite/business benefit | 393(1) Table 8(iv) |
| 194S | Virtual digital assets | 393(1) Table 8(vi); 393(4) Table 12 |
| 194T | Payments to partners | 393(3) Table 7 |
| 195 | Payments to non‑residents | Merged into 393(2) |
| 195A | Net‑of‑tax income | 393(10) |
| 196 | Payments to Govt/RBI/Exempt bodies | 393(5) |
| 196A | Units of non‑residents | 393(2) Table 10; 393(4) Table 15 |
| 196B | Income from units | 393(2) Tables 11 & 12 |
| 196C | Foreign currency bonds/shares | 393(2) Tables 13 & 14 |
| 196D | FII income from securities | 393(2) Tables 15 & 16; 393(4) Tables 16 & 17 |
B. TDS Compliance, Certificates & Reporting
| Old Section | Subject | New Act Section |
|---|---|---|
| 197 | Lower deduction certificate | 395(1) |
| 197A | No deduction in certain cases | 393(6) |
| 197B | Lower deduction – temporary | Omitted |
| 198 | TDS deemed income of payee | 396 |
| 199 | Credit for TDS | 390(1),(5),(6) |
| 200 | Duty of person deducting TDS | 397(3) |
| 200A | Processing of TDS statements | 399 |
| 201 | Failure to deduct/pay TDS | 398 |
| 202 | TDS is one mode of recovery | 390(4) |
| 203 | TDS certificates | 395(4) |
| 203A | TAN | 397(1) |
| 206A | Statement for payments without TDS | 397(3) |
| 206AA | PAN requirement | 397(2) |
| 206AB | Higher TDS for non‑filers | Omitted |
C. TCS (Old → New)
| Old Section | Description | New Section |
|---|---|---|
| 206C | Procedural & other provisions for TCS compliance | 395(3), 397(3), 398 |
| 206C(1) | TCS on specified goods (alcohol) | 394(1) – Table Item 1 |
| 206C(1) | TCS on sale of scrap | 394(1) – Table Item 4 |
| 206C(1) | TCS on sale of tendu leaves | 394(1) – Table Item 2 |
| 206C(1) | TCS on sale of timber, etc. | 394(1) – Table Item 3 |
| 206C(1C) | TCS on parking lot, toll etc. | 394(1) – Table Item 9 |
| 206C(1C) | TCS on sale of minerals (coal, lignite, iron ore) | 394(1) – Table Item 5 |
| 206C(1F) | TCS on sale of motor vehicle | 394(1) – Table Item 6 |
| 206C(1G) | TCS on foreign remittance (LRS) | 394(1) – Table Item 7 |
| 206C(1I) | TCS on sale of overseas tour package | 394(1) – Table Item 8 |
| 206CA | TAN for TCS collectors | 397(1)(a) |
| 206CC | PAN requirement for TCS | 397(2) |
Conclusion & Notes
The New Act largely preserves the core intent of the TDS/TCS regime while clarifying payer categories, timing, and certificate processes, and by consolidating dispersion across legacy sections into unified tables (particularly under Section 393 for TDS and Section 394(1) for TCS). Practitioners should pay attention to thresholds, “Specified Person” rules, and updated timing of deduction/collection to remain compliant.
Disclaimer: This post is for informational purposes only and does not constitute tax or legal advice. Please consult your tax advisor for specific cases.
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