From 1 April 2026, all TDS deductions, returns, and certificates are governed by the Income-tax Act, 2025. The rates are unchanged. Everything else has changed.
Finance teams and payroll systems that have not been updated are already filing incorrectly.
Replacement of the 194-Series
The entire 194-series has been replaced. Payments now fall under three consolidated sections: Section 392 for salary, Section 393 for non-salary resident payments, and Section 394 for non-resident payments.
Old section references such as 194C or 194J are no longer valid for post-1 April 2026 transactions. Each payment category now carries a numeric code between 1001 and 1092. Filing returns using old references will trigger validation errors on TRACES, and correction statements will be required.
TDS Return Forms
- Form 24Q is replaced by Form 138.
- Form 26Q is replaced by Form 140.
- Form 27Q is replaced by Form 144.
TDS Certificates
- Form 16 is replaced by Form 130, to be issued to employees.
- Form 16A is replaced by Form 131.
Forms 15G and 15H Merged into Form 121
Forms 15G and 15H have been merged into a single Form 121. Old declarations are not valid for Tax Year 2026-27. A fresh Form 121 must be collected from all eligible payees before processing payments without TDS deduction.
What Has Not Changed
Most major TDS rates remain the same:
- Professional fees: 10 percent.
- Contractor payments: 1 percent or 2 percent.
- Rent above Rs 50,000 per month: 2 percent.
- Interest payments: 10 percent.
The Practical Impact
The risk this year is not the rate. It is the system. An ERP mapped to old section codes, a payroll software issuing Form 16 instead of Form 130, or a vendor submitting Form 15H instead of Form 121 creates an avoidable compliance failure. The Q1 TDS return for Tax Year 2026-27 is due 31 July 2026. The window to correct mapping errors before the first filing is now.