For the first half of 2026, Indian accountants had to get used to a new method of reporting TDS. The 1961 Act was repealed by the Income Tax Act, 2025 on April 1st, 2026, and a set of numerical payment codes replaced the well-known Section 194 series. For a post-April transaction, a challan or quarterly report that still displays an outdated section number is deemed faulty. Completing TDS files correctly now requires understanding how the old system relates to the new one.

Why the System Changed

TDS provisions were distributed throughout sections 192 to 194T of the previous Act. This is reduced to three parent parts in the 2025 Act. TDS on salaries is covered under Section 392, which supersedes Section 192. Almost all non-salary payments are covered by Section 393, which replaces sections 194A, 194C, 194H, 194I, 194J, and several others. Section 206C has been replaced by Section 394, which addresses tax collection at the source.

The new system gives a payment a four-digit code within a specified range rather than calling it by section. Resident TDS, non-resident TDS, and TCS categories include the total of 92 codes.

How the Codes Map to Old Sections

Some of the most common payment types and their new codes include:

• Salary payments, earlier under Section 192, are now code 1001 under Section 392.
• Contractor payments to individuals or HUFs, earlier Section 194C at 1%, now code 1005
• Contractor payments to companies or firms, earlier Section 194C at 2%, now code 1006
• Interest paid by banks, earlier Section 194A, now code 1008
• Rent on land or buildings, earlier Section 194I, now code 1017
• Commission or brokerage, earlier Section 194H, now code 1014
• Technical services and royalty, earlier Section 194J at 2%, now code 1026
• Professional fees and director remuneration, earlier Section 194J at 10%, now codes 1027 and 1028

A handful of codes, including 1007, 1010, 1025, and 1036, appeared in draft forms but weren’t individually notified as of this writing. It’s best to hold off on using these until confirmed, or check with a tax consultant.

The Transition Rule and Form Changes

The rule that decides which act applies isn’t about when you deposit the tax. It depends on whichever comes earlier, the date you credit the payee in your books or the date you actually pay them. If that earlier event falls on or before 31st March 2026, the old Act and its section numbers still apply, even if the deposit happens later. If the earlier event falls on or after 1st April 2026, the new Act and its numeric codes take over.

For instance, crediting a contractor in your books on 28th March 2026 but paying on 5th April 2026 still counts as an old-Act transaction, since the credit date comes first. If both the credit and payment for another vendor happen after 1st April, the new code applies instead.

Alongside the codes, the return forms have changed names too. Form 24Q is now Form 138, Form 26Q is now Form 140, Form 27Q is now Form 144, and Form 27EQ is now Form 143. Payee certificates have changed as well, replacing the older Form 16 and Form 16A formats.

Avoiding Common Filing Errors

This quarter, a few errors are occurring often. On a post-April transaction, using an outdated section number makes the return inaccurate and may prevent the payee’s credit from accurately reflecting. Create distinct challans for each period because combining transactions from before and after April on one challan also results in validation failures. Another common error that causes processing delays is filing on the incorrect form, such as utilising the outdated Form 26Q for transactions that should be on Form 140.

Conclusion

The Income Tax Act of 2025’s change to numeric TDS codes affects every challan, return, and certificate a business files, making it more than just a name change. Businesses can avoid faulty returns and notices by being familiar with the new code ranges, using the appropriate transition rule, and updating accounting software on time. For the rest of the year, filings will go more smoothly if old sections are mapped to their new codes.