TDS & TCS Changes from 1 April 2026: New Sections 392, 393 & 394, Form 130, Form 131 & Updated Compliance Rules
Posted by Gaurav Verma | 31 March 2026
- No change in most TDS/TCS rates or threshold limits (except TCS rationalisation to uniform 2% on several items).
- All old TDS sections replaced by Section 392 (Salary TDS) and Section 393 (Other TDS) with table-based references.
- TCS consolidated under new Section 394 (replaces old Section 206C).
- Form 16 → Form 130 | Form 16A → Form 131.
- LRS education/medical TCS reduced to flat 2%; overseas tour packages now flat 2% (no threshold).
- You must quote new section + table serial numbers in all TDS/TCS returns filed for Tax Year 2026-27 onwards.
From 1 April 2026 (Tax Year 2026-27), the new Income-tax Act, 2025 and Income-tax Rules, 2026 are fully applicable. While rates and thresholds are largely unchanged, the biggest reform is the complete consolidation of TDS and TCS provisions into simple tables. This makes compliance easier but requires you to use the new section references.
Here is a clear, practical guide on all TDS & TCS changes effective 1 April 2026 that every business, employer, and collector must know.
1. Major Structural Change: TDS & TCS Consolidated
- Section 392 → TDS on Salary (replaces old Section 192)
- Section 393 → TDS on all other payments (replaces old Sections 193 to 194T) – uses easy tables
- Section 394 → TCS on all specified transactions (replaces old Section 206C) – uses single table
For any payment/credit or collection on or after 1 April 2026, you must quote the new Section + Table Serial Number. Quoting old sections (194C, 206C etc.) will cause validation errors in the system.
2. Common TDS Sections – Old vs New Reference (FY 2026-27)
| Nature of Payment | Old Section (1961 Act) | New Section (2025 Act) | Threshold Limit | TDS Rate |
|---|---|---|---|---|
| Salary | 192 | 392(1) | Basic exemption limit | Slab rates |
| Contractor / Sub-contractor | 194C | 393(1) Table Sr. No. 6(i) | ₹30,000 (single) / ₹1,00,000 (aggregate) | 2% / 1% |
| Professional / Technical Fees | 194J | 393(1) Table Sr. No. 9 | ₹50,000 | 10% |
| Rent (Land/Building) | 194-I | 393(1) Table Sr. No. 10 | ₹2,40,000 p.a. | 10% |
| Purchase of Immovable Property (≥ ₹50 lakh) | 194-IA | 393(1) Table Sr. No. 12 | ₹50,00,000 | 1% |
3. Common TCS Items – Old vs New Reference & Rates (FY 2026-27)
TCS rates have been rationalised to a uniform 2% on several items for simplicity and relief.
| Nature of Transaction | Old Section (1961 Act) | New Section (2025 Act) | Old Rate | New Rate (w.e.f. 01.04.2026) | Threshold |
|---|---|---|---|---|---|
| Sale of alcoholic liquor for human consumption | 206C(1) | 394(1) Table Sl. No. 1 | 1% | 2% | Nil |
| Sale of tendu leaves | 206C(1) | 394(1) Table Sl. No. 2 | 5% | 2% | Nil |
| Sale of scrap | 206C(1) | 394(1) Table Sl. No. 3 | 1% | 2% | Nil |
| Sale of minerals (coal, lignite, iron ore) | 206C(1) | 394(1) Table Sl. No. 4 | 1% | 2% | Nil |
| LRS – Education / Medical treatment | 206C(1G) | 394(1) Table Sl. No. 5(a) | 5% | 2% | ₹10 lakh |
| Overseas tour programme packages | 206C(1G) | 394(1) Table Sl. No. 5(b) | 5% / 20% | Flat 2% | Nil (no threshold) |
4. New TDS / TCS Forms Effective FY 2026-27
- Form 16 → Form 130 (Salary TDS Certificate)
- Form 16A → Form 131 (Non-salary TDS Certificate)
- Form 26AS → Form 168 (Consolidated Tax Statement)
- Form 15G & 15H → Combined into single Form 121
Your accounting / payroll / billing software must be updated to use new section references and generate Form 130 / 131.
5. Special Simplification for NRI Property Purchase (TDS)
Buyers purchasing immovable property from Non-Resident Indians no longer need TAN. PAN-based challan is sufficient for deducting and depositing TDS under Section 393.
6. Real-Life Impact Example
Mr. Sharma (Contractor Payment ₹1,20,000 in April 2026 + LRS education remittance ₹15 lakh)
Old way → Quote 194C @ 2% and 206C(1G) @ 5%
New way → Quote Section 393(1) Table Sr. No. 6(i) @ 2% and Section 394(1) Table Sr. No. 5(a) @ 2%
Same or lower tax, simpler quoting & reporting.
What Should Businesses, Employers & Collectors Do Before 1 April 2026? (Action Checklist)
- Update accounting / payroll / billing software for new Sections 392, 393 & 394 and table references.
- Train your accounts team on quoting new table serial numbers in TDS/TCS returns.
- Generate Form 130 (instead of Form 16) for salary from April 2026 onwards.
- Download the official old-section to new-section mapping tool from the Income Tax e-filing portal.
- For NRI property deals – use PAN-based challan only (no TAN).
- Review overseas tour / LRS transactions – new 2% rate will apply from 1 April 2026.
These changes are genuinely compliance-friendly. The government has reduced 25+ TDS sections and multiple TCS rates into just three clean sections with tables. Rates are largely unchanged (with beneficial rationalisation in TCS).
Need help updating your software, training your team, or personalised TDS/TCS compliance plan?
Drop your query in the comments or contact me directly through the form on gauravverma.com. I will personally guide you on the smooth transition.
More detailed guides coming soon:
→ Full TDS/TCS Rate Chart with new table numbers (PDF)
→ Step-by-step guide to file TDS/TCS return under new sections
→ How to issue Form 130 & Form 131
Sources: Income-tax Act, 2025 & Income-tax Rules, 2026 (notified by CBDT) + Finance Bill 2026
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