TDS Compliance Under the New Income Tax Act 2025: A Complete Guide for Deductors

TDS: India’s Pay-As-You-Earn System

Tax Deducted at Source (TDS) ensures tax is collected at the point of income generation. As a deductor — whether you’re an employer, a company making payments, or a buyer of property — TDS compliance is your legal responsibility under the Income Tax Act, 2025.

🔴 Latest Update — September 2026

Remittance Verification Drive: The Income-tax Department is examining outward remittances of about ₹1.29 lakh crore, with 394 entities and 36 certifying professionals under verification. Form 15CB certification standards are in focus — ensure all foreign remittances have proper documentation.
FAST-DS Scheme: Taxpayers with undisclosed foreign income/assets can regularise until 31 December 2026 at 60% effective rate (30% tax + 30% penalty) for assets up to ₹1 crore.
New Income-tax Rules, 2026: Notified on March 20, 2026, with just 333 rules and 190 forms (down from 511 rules and 399 forms under the 1962 Rules). Second tranche of statutory forms rolled out on June 30, 2026.

Key TDS Sections and Rates Under Income Tax Act 2025 (FY 2026-27)

⚠️ CRITICAL UPDATE: The Income Tax Act, 2025 has completely renumbered ALL TDS provisions. Old sections 192, 194A, 194C, etc. NO LONGER EXIST. Here’s the new structure:

New Section (2025 Act)	Old Section (1961 Act)	Nature of Payment	TDS Rate
Section 392	192	Salary	As per applicable slab rates
Section 393(1) Table 1 Sl. 5	194A	Interest (other than securities)	10%
Section 393(1) Table 1 Sl. 6(i)	194C	Contractor Payments	1% (Individual/HUF) / 2% (Others)
Section 393(1) Table 1 Sl. 1(ii)	194H	Commission / Brokerage	5%
Section 393(1) Table 1 Sl. 2(ii)	194I	Rent	2% (Plant/Machinery) / 10% (Land/Building)
Section 393(1) Table 1 Sl. 6(iii)	194J	Professional / Technical Fees	2% (Technical) / 10% (Professional)
Section 393(1) Table 1 Sl. 3	194Q	Purchase of Goods (>₹50L)	0.1%
Section 393(1) Table 1 Sl. 4	194S	Virtual Digital Assets	1%
Section 393(2) Table 2 Sl. 17	195	Remittance to Non-Residents	As per DTAA / Domestic rates

TDS Return Filing Due Dates

Quarter	Period	Due Date
Q1	April – June	July 31
Q2	July – September	October 31
Q3	October – December	January 31
Q4	January – March	May 31

New Feature: NIL-TDS Certificates Under Section 247

Under the new Income Tax Act 2025, taxpayers whose total income falls below the taxable threshold can apply for a NIL-TDS certificate under Section 247. This is particularly useful for:

🧓 Retirees with interest income below taxable limits
🎓 Students earning from internships or part-time work
📊 Small investors with dividend/interest income below threshold
🏢 Startups with no taxable income in initial years

Foreign Remittances: Form 15CB/15CA Compliance

For payments to non-residents exceeding ₹5 lakh:

Form 15CA: Online declaration by the remitter
Form 15CB: CA certificate confirming tax compliance under Section 393(2)
Required for: Professional fees, royalty, interest, dividends, import payments
Penalty for non-compliance: ₹1 lakh per default + potential prosecution

Penalties for Non-Compliance Under New Act

Late deduction: Interest at 1% per month
Late deposit: Interest at 1.5% per month
Late filing of TDS return: ₹200 per day (max = TDS amount)
Non-filing: Penalty from ₹10,000 to ₹1,00,000
Incorrect information: Penalty from ₹10,000 to ₹1,00,000
Form 15CB violations: Under verification — potential penalties being enforced strictly

Best Practices for TDS Compliance

✅ Maintain a TDS calendar with deposit and filing deadlines
✅ Verify PAN of all deductees before making payments
✅ Issue TDS certificates (Form 16/16A) within prescribed timelines
✅ Reconcile Form 26AS with your TDS records quarterly
✅ Accept NIL-TDS certificates and lower deduction certificates from eligible payees
✅ File Form 15CA/15CB for all foreign remittances above ₹5 lakh
✅ Document DTAA benefits claimed on payments to non-residents