Mukesh Kabra – [2026] 185 taxmann.com 455 (Article)
1. Introduction – What has Actually Changed?
The TDS and TCS provisions under the new Income-tax Act, 2025 are not just a renumbering of old sections. The structure of the law has been redesigned in a way that changes how professionals will approach compliance. Earlier, we were used to identifying the correct section—like 194C for contract or 194J for professional fees. Now, the focus has shifted to identifying the correct entry in a table.
This shift may look small at first, but in practice it is quite significant. Under the old law, one could remember section numbers and apply them directly. Under the new law, you have to first understand the structure of the table, and then match the transaction with the correct row. This requires a slightly different way of thinking.
Another important change is that the law is now more organised. Instead of having multiple sections scattered across the Act, the provisions are grouped logically. Charging provisions, exceptions, and compliance requirements are placed in separate sections, making the law easier to read as a whole.
At the same time, it is important to note that the substantive provisions—like rates, thresholds, and scope—have largely not changed. The intention is clearly to simplify structure, not to increase tax burden.
From a professional point of view, this means that while your existing knowledge is still valid, you need to re-map that knowledge into the new framework. Those who adapt quickly will find the new law easier to work with.
2. Structure of Sections 392 to 402
To understand the new system, it is useful to break it into three logical parts—charging provisions, exceptions, and compliance. This structure is much cleaner than the earlier law and helps in understanding the flow of TDS/TCS.
Total 11 Section of the Income Tax Act, 2025 are dedicated to the TDS and TCS. A brief of these sections are tabulated for ease of conceptual clarity and reference:
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Section
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Particulars
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392
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Provision related to TDS on Salary
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393
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Separate Section and table for different type of Payments like TDS table for
- Payment to Residents – 393 (1),
- Payment to Non-Residents – 393 (2)
- Payment to Any Person – 393(3)
- Payments where no TDS is required – 393(4)
- Details for declaration for Non-Deduction of TDS – 393(6)
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394
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Provisions related to collection at sources (TCS)
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395
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Provisions related to certificates for lower/NIL TDS/TCS
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396
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Corresponding to Old Sec 198 that TDS is income received
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397
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Provisions related to application for TAN, Higher TDS/TCS for non-PAN persons, Filing of TDS/TCS Return etc
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398
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Provisions related to consequences of failure to deduct TDS/TCS.
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399
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Provisions related to processing of TDS/TCS Return
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400
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Power of central Govt to relax provisions under this chapter
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401
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Bar against direct demand. Corresponding sec of Old sec 205
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402
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Interpretation and definition of word used for chapter related to TDS/TCS like specified person, contract etc.
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This structured approach is helpful because now you can analyse any transaction step-by-step. First, check whether TDS applies, then check whether any exception is available, and finally ensure compliance is properly done.
In practical terms, this reduces confusion and avoids the need to jump across multiple sections, which was a common issue under the earlier law.
3. Section 392 – TDS on Salary
The provisions relating to salary have largely been carried forward without major changes. This is understandable because salary TDS works on a completely different logic compared to other payments. It is based on estimated income rather than a fixed rate.
The employer is required to estimate the total income of the employee for the year and deduct tax accordingly. This includes considering deductions, exemptions, and even income from previous employment if details are provided.
One important point is that the employer has some flexibility. Adjustments can be made during the year if there is a change in salary or deductions. This helps in avoiding large deductions at the end of the year.
Another aspect that continues is the choice between the old and new tax regime. The employer needs to consider the option exercised by the employee while calculating TDS. This adds a layer of responsibility but is now a well-settled process.
From a practical point of view, salary TDS will not pose any new challenges. Most systems and processes are continue as they are, with only minor updates required for section, rule and form references.
Overall, Section 392 remains a stable part of the law and does not require much re-learning.
4. Section 393 – Core TDS Provision (Table System)
Section 393 is the most important part of the new TDS framework. It replaces a large number of sections from the old Act and brings them into a single table-based system. This is where most of the real change has happened.
The key idea here is that instead of referring to different sections, you now refer to nature of payment and type of payee. Each sub section is dedicated to specific nature of payee like, Payment to Resident, Non-Resident, payment to any person and like. Each sub section contains a table wherein tables contain different entries specifies the nature of payment, who is responsible to deduct tax, and the threshold limit.
One important thing to understand is that the table does not always mention the rate. Instead, it uses the term “rate in force”. This means you have to refer to the Finance Act to find the applicable rate.
This may initially feel inconvenient, but it actually makes the law more flexible. Rates can be changed through the Finance Act without amending the main law. Over time, we will get used to this approach.
In practice, the biggest challenge will be correct classification. For example, whether a payment is for contract or professional services can change the TDS rate. Since everything is in one table, classification becomes even more important.
Once you get comfortable with the table, however, the system becomes easier. Instead of remembering multiple sections, you just need to understand the structure of one table properly.
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