Income Tax2 min read
TDS & TCS for Tax Year 2026-27: Key Changes Under the New Act
From 1 April 2026, TDS and TCS are governed by the Income-tax Act, 2025. The provisions earlier spread across sections 192 to 206C are now consolidated in three sections: 392 (salary), 393 (other TDS) and 394 (TCS).
CA Harshad Makwana
Key points
- From 1 April 2026, TDS and TCS are governed by the Income-tax Act, 2025, consolidated into sections 392, 393, and 394.
- Quarterly statements now use 4-digit codes (1001–1092) replacing old section numbers, while specific payments are reported in Form 141.
- TDS is 2% on cash withdrawals above ₹1 crore in a tax year, or ₹3 crore for co-operative societies.
- The statement for July to September 2026 is due by 31 October 2026.
From 1 April 2026, TDS and TCS are governed by the Income-tax Act, 2025. The provisions earlier spread across sections 192 to 206C are now consolidated in three sections: 392 (salary), 393 (other TDS) and 394 (TCS). Most TDS rates are unchanged; the structure, references and reporting are new.
Our TDS & TCS Rate Chart for Tax Year 2026-27, attached below, sets out each provision with its section code, rate, threshold and statutory reference.
Key points for Tax Year 2026-27
- Section codes replace section numbers. Quarterly statements now use 4-digit codes (1001–1092). Rent paid by individuals, property purchases, VDA purchases by individuals and payments under section 393(1) Sl. 6(ii) are reported in Form 141, without a section code.
- Manpower supply is "work". TDS applies at 1% or 2% as a contract payment (codes 1023 and 1024).
- Cash withdrawals. TDS is 2% on withdrawals above ₹1 crore in a tax year, or ₹3 crore for co-operative societies.
- Exemptions with conditions. For dividends, e-commerce and virtual digital assets, the limits of ₹10,000, ₹5 lakh and ₹50,000 / ₹10,000 apply only when the specified conditions are met.
- TCS at 2%. Liquor, tendu leaves, timber, scrap, minerals, overseas tour packages, and LRS remittances for education or medical treatment above ₹10 lakh are now collected at 2%.
- Property bought from a non-resident. From 1 October 2026, a resident individual or HUF buyer can deduct tax through Form 141 without a TAN.
- MACT interest. Interest awarded to an individual by a Motor Accident Claims Tribunal is exempt from TDS.
Before the next return
The statement for July to September 2026 is due by 31 October 2026. We suggest:
- Updating accounting software to the new section codes.
- Reviewing vendor classification, particularly manpower contracts.
- Confirming eligibility before applying any exemption.
- Depositing tax by the 7th of the following month (30 April for March).
About the chart
The chart covers every section code from 1001 to 1092, with the 1961 Act reference for each entry and links to the official text. It also covers deposit dates, return due dates, forms and the rules when PAN is not furnished. Law verified to 9 October 2026.
