If your team's mental model is "194C contractor 1% / 2%, 194J professional 10%, 194H commission 2%, 194Q purchase of goods 0.1%", that vocabulary still describes the right rates. But the form filing, the challan, and your TDS software all now reference Section 393 + a four-digit payment code (1023 onwards) instead.
The Income Tax Act 2025 takes effect from 1 April 2026. The headline change for finance teams, accounts payable, and tax professionals: every TDS section in the familiar 194 series is now a numeric payment code under Section 393.
This is the master converter guide: a complete mapping of every legacy TDS section (194C, 194J, 194H, 194Q, 194A, and others) to its new Section 393 payment code. Use this to navigate the transition, update your software, and file Q1 FY 2026-27 returns under the new Act.
Related guides on individual TDS sections:
- TDS on Contractor Payments: Section 194C (1% / 2%)
- TDS on Professional & Technical Fees: Section 194J (2% / 10%)
- TDS on Commission & Brokerage: Section 194H (2%)
- TDS on Purchase of Goods: Section 194Q (0.1%)
- TDS on Interest: Section 194A (10%)
- TDS Rate Chart 2026-27: All Sections and Thresholds
Looking for expert help with TDS section 393 payment codes 194C 194J 194Q new income tax act 2025? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Why Did TDS Sections Change?
The Income Tax Act 1961 accumulated TDS provisions over six decades. By the time the Act was retired, 25+ standalone non-salary TDS sections existed (194 to 194T, with sub-clauses), with numbering gaps, overlapping triggers, and inconsistent threshold structures. Every CBDT circular adding a new TDS category had to invent a new section number.
The 2025 Act consolidates all of this:
| Section | What It Covers |
|---|---|
| Section 392 | Salary TDS (was Section 192 in the 1961 Act) |
| Section 393 | All non-salary TDS (was 194A through 194T) |
| Section 394 | TCS (Tax Collected at Source; was Section 206C) |
Within Section 393, each nature-of-payment is a numeric payment code starting from 1004.
Substantively, FY 2026-27 rates and thresholds are unchanged from the 194-series. The renaming is structural, not a new tax.
Complete TDS Mapping: Old vs New Section 393
Here is the complete mapping table for the most frequently used TDS sections:
| Legacy Section | New Section | Payment Code | Nature of Payment | Rate | Threshold |
|---|---|---|---|---|---|
| 194C | 393(1) Sl.6(i) D(a) | 1023 | Contractor – Individual/HUF | 1% | ₹30,000 single / ₹1,00,000 aggregate |
| 194C | 393(1) Sl.6(i) D(b) | 1024 | Contractor – Others | 2% | ₹30,000 single / ₹1,00,000 aggregate |
| 194J(a) | 393(1) Sl.6(iii) D(a) | 1026 | Technical Services | 2% | ₹50,000 |
| 194J(b) | 393(1) Sl.6(iii) D(b) | 1027 | Professional Services | 10% | ₹50,000 |
| 194H | 393(1) Sl.1(ii) | 1006 | Commission / Brokerage | 2% | ₹20,000 |
| 194Q | 393(1) Sl.8(ii) | 1031 | Purchase of Goods | 0.1% | Turnover + purchase limits |
| 194I(a) | 393(1) Sl.2(ii) D(a) | 1008 | Rent – Machinery | 2% | ₹50,000/month |
| 194I(b) | 393(1) Sl.2(ii) D(b) | 1009 | Rent – Land & Building | 10% | ₹50,000/month |
| 194A | 393(1) Sl.5(ii) D(a) | 1020 | Interest – Senior Citizen | 10% | ₹1,00,000 |
| 194A | 393(1) Sl.5(ii) D(b) | 1021 | Interest – Non-Senior | 10% | ₹50,000 |
| 193 | 393(1) Sl.5(i) | 1019 | Interest on Securities | 10% | ₹10,000 |
| 194 | 393(1) Sl.7 | 1029 | Dividend | 10% | ₹10,000 |
| 194D | 393(1) Sl.1(i) | 1005 | Insurance Commission | 5–20% | ₹20,000 |
| 192A | 392(7) | 1004 | EPF Withdrawal | 10% | ₹50,000 |
| 194K | 393(1) Sl.1(iii) | 1007 | Mutual Fund Dividend | 10–20% | ₹10,000 |
| 194LA | 393(1) Sl.2(i) | 1002 | Property Sale (Buyer TDS) | 1% | ₹50L+ on property |
| 194LBA | 393(1) Sl.6(ii) | 1025 | Sub-contractor (Construction) | 1% | ₹75,000 |
Quick Lookup by Payment Type
Use this quick guide to find the old section number and new Section 393 payment code for your transaction type:
| Payment Type | Old Section | New Code | Rate |
|---|---|---|---|
| Contractor (individual/HUF) | 194C | 1023 | 1% |
| Contractor (company/partnership) | 194C | 1024 | 2% |
| Professional fees (doctors, advocates, CA) | 194J | 1027 | 10% |
| Technical services (IT, engineering) | 194J | 1026 | 2% |
| Commission/brokerage | 194H | 1006 | 2% |
| Purchase of goods (retail, wholesale) | 194Q | 1031 | 0.1% |
| Rent (machinery/equipment) | 194I | 1008 | 2% |
| Rent (land/building) | 194I | 1009 | 10% |
| Interest (senior citizen deposits) | 194A | 1020 | 10% |
| Interest (other deposits) | 194A | 1021 | 10% |
| Dividend income | 194 | 1029 | 10% |
| Insurance commission | 194D | 1005 | 5–20% |
| Property purchase (buyer TDS) | 194LA | 1002 | 1% |
| Sub-contractor (construction) | 194LBA | 1025 | 1% |
| Mutual fund dividend | 194K | 1007 | 10–20% |
For detailed rules on each payment type, see the related guides above.
What Changed: Rate-Wise Separate Section Codes
Under the Income Tax Act 1961, sections were simple and consolidated: 194C, 194A, 194H, 194I, 194J, 194Q were each single sections.
Now under ITA 2025, they are referred to in a tabular format: 393(1) [Table: Serial No. 6], 393(1) [Table: Serial No. 5], etc.
Most importantly: where multiple rates existed within the same section, they are now divided into separate entries with separate codes.
1. Contractor Payments – Old Section 194C → New Section 393
| Aspect | Old Act (1961) | New Act (2025) |
|---|---|---|
| Section | 194C | 393(1) Sl.6(i) |
| Code | None (Single section) | 1023 (Individual/HUF @ 1%) / 1024 (Others @ 2%) |
| Rate Structure | 1% on individuals, 2% on others | Same rates, separate codes |
Takeaway: Same section, but separate codes based on entity type and rate. Correct code selection is critical for challan and return filing.
2. Professional & Technical Fees – Old Section 194J → New Section 393
| Aspect | Old Act (1961) | New Act (2025) |
|---|---|---|
| Section | 194J | 393(1) Sl.6(iii) |
| Code | None | 1026 (Technical @ 2%) / 1027 (Professional @ 10%) |
| Rate Structure | 2% technical, 10% professional | Same rates, separate codes |
Takeaway: Clear bifurcation based on nature of payment and rate. Using the wrong code will trigger validation errors.
3. Rent – Old Section 194I → New Section 393
| Aspect | Old Act (1961) | New Act (2025) |
|---|---|---|
| Section | 194I | 393(1) Sl.2(ii) |
| Code | None | 1008 (Machinery @ 2%) / 1009 (Land/Building @ 10%) |
| Rate Structure | 2% machinery, 10% other rent | Same rates, separate codes |
Takeaway: Again, separate section codes for separate rates based on rental property type.
New Section 393: The Umbrella TDS Provision
Section 393 of the Income Tax Act, 2025 consolidates all non-salary TDS deduction provisions into one section with a tabular structure.
Why This Consolidation?
- Under the old act, TDS provisions were unnecessarily divided into many sections
- Inserting TDS for new transaction types was difficult and disrupted section numbering
- The new structure ensures easy reference and future insertion of new TDS categories without creating new section numbers
How Section 393 Works
Section 393(1) contains a table with serial numbers (Sl. 1, 2, 3, etc.), and each row specifies:
- Nature of payment
- Rate of TDS
- Threshold
- Payment code (4-digit number)
Payments are now classified by nature and rate, not by a single section number.
Applicability Timeline
- From 1 April 2026: Section 393 applies. Old section numbers (194C, 194J, etc.) are not valid.
- Up to 31 March 2026: Old Income Tax Act 1961 applies. Continue using 194C, 194J, etc.
Form Changes: What Certificates to Issue
Old TDS certificates are no longer valid from TY 2026-27. Issue the new forms:
| Old Form | New Form | Purpose | Valid Until |
|---|---|---|---|
| Form 16 | Form 130 | Salary TDS certificate | 31 March 2026 |
| Form 16A | Form 131 | Non-salary TDS certificate | 31 March 2026 |
| Form 27D | Form 133 | TCS certificate | 31 March 2026 |
Critical: Issuing Form 16 for TY 2026-27 is non-compliant. Issue Form 130 instead.
Practical Step-by-Step: What to Do Now
Step 1: Update Your ERP and TDS Software
Every FVU (Form Value Unit) code has been reassigned. Audit your accounting software, payroll software, and TDS compliance tools before filing the first quarterly return for TY 2026-27 (Q1 FY 2026-27, due by 15 May 2026).
Action items:
- Verify that your TDS software can generate Section 393 payment codes
- Update master data to reflect new code assignments
- Test with a trial return before filing live
Step 2: Update Your Internal Reference Documents
Create a cross-reference table for your team:
| Old Section | New Section Reference | Payment Code(s) |
|---|---|---|
| 194C | 393(1) Sl.6(i) | 1023, 1024 |
| 194J | 393(1) Sl.6(iii) | 1026, 1027 |
| 194H | 393(1) Sl.1(ii) | 1006 |
| 194Q | 393(1) Sl.8(ii) | 1031 |
| 194I | 393(1) Sl.2(ii) | 1008, 1009 |
| 194A | 393(1) Sl.5(ii) | 1020, 1021 |
Step 3: Train Your Finance Team
- Correct code selection becomes critical; using the wrong code will trigger validation errors
- Ensure AP and finance teams understand the new structure before Q1 filing
- Consider a dry run with sample transactions to verify software behavior
Step 4: Update Challan References
TDS challans now require:
- Section 393 (not 194C, 194J, etc.)
- Payment Code (e.g., 1027 for professional fees @ 10%)
- Not the old section number
Example Challan:
- Old: Section 194J, Rate 10%, Amount ₹50,000, Tax ₹5,000
- New: Section 393, Payment Code 1027, Rate 10%, Amount ₹50,000, Tax ₹5,000
Step 5: Review Q4 FY 2025-26 Returns Before March 31
Before the law changes, ensure all FY 2025-26 quarterly returns (Q1–Q4) use the old section numbers (194C, 194J, etc.). Do not mix old and new section numbers in the same financial year.
Common Mistakes to Avoid
1. Using Old Section Numbers in Q1 FY 2026-27 Challans
Mistake: Filing TDS challans under Section 194C in April 2026.
Impact: Validation error. Challan rejected by GST/TDS portal.
Fix: Use Section 393 + correct payment code (1023 or 1024 for contractor).
2. Choosing the Wrong Payment Code
Mistake: Issuing professional fee TDS under code 1026 (technical @ 2%) instead of 1027 (professional @ 10%).
Impact: TDS under-deducted. Deductee receives lower TDS credit. Compliance mismatch in return filing.
Fix: Classify nature of payment correctly. Technical = 1026, Professional = 1027.
3. Issuing Old Form 16 for TY 2026-27
Mistake: Issuing Form 16 to employees for salary earned in FY 2026-27.
Impact: Non-compliant certificate. Employee cannot file ITR using Form 16 for new year.
Fix: Issue Form 130 for all salary certificates from TY 2026-27 onwards.
4. Not Updating Software Masters Before Filing
Mistake: Filing quarterly returns with old section numbers in software after 1 April 2026.
Impact: Portal rejects the return. Filing delayed. Penalties apply if not corrected by deadline.
Fix: Update software and test before 1 April 2026. File a test return in March if possible.
5. Confusing Payment Code with Rate
Mistake: Thinking payment code = rate (e.g., "1023 means 1.023% tax").
Impact: Misclassification and under/over-deduction.
Fix: Understand that payment codes are arbitrary identifiers. Check the section 393 table for the correct rate.
Key Takeaways for Finance Teams
| Change | Implication |
|---|---|
| New Section Numbers | Sections 392 (salary), 393 (non-salary), 394 (TCS) replace all old TDS sections |
| Payment Codes | Every TDS category now has a 4-digit payment code (1004 onwards) |
| Form Changes | Form 16 → Form 130, Form 16A → Form 131, Form 27D → Form 133 |
| Tax Year | Assessment Year (AY) is replaced by Tax Year (TY) from 1 April 2026 |
| Code Selection | Multiple rates = multiple section codes. Correct code selection is critical |
| Effective Date | 1 April 2026 (applies to transactions from this date) |
| Rates Unchanged | Rates and thresholds remain the same; structure changed, not substance |
What Happens If You Use the Wrong Code?
- Validation errors at portal submission
- Return rejection until corrected
- Penalties if not filed by deadline
- Compliance notices if TDS and return don't match
- Deductee mismatch if your TDS doesn't match the form 131 they received
Frequently Asked Questions
Q: What is the new section number for 194C (contractor TDS)?
A: Section 194C is now mapped to Section 393(1) Sl.6(i) with payment codes 1023 (individual/HUF @ 1%) and 1024 (others @ 2%).
Q: What is the new section number for 194J (professional fees)?
A: Section 194J is now mapped to Section 393(1) Sl.6(iii) with payment codes 1026 (technical @ 2%) and 1027 (professional @ 10%).
Q: What is the new section number for 194H (commission)?
A: Section 194H is now mapped to Section 393(1) Sl.1(ii) with payment code 1006 (commission/brokerage @ 2%).
Q: What is the new section number for 194Q (purchase of goods)?
A: Section 194Q is now mapped to Section 393(1) Sl.8(ii) with payment code 1031 (purchase of goods @ 0.1%).
Q: Are TDS rates and thresholds changing?
A: No. Rates and thresholds for FY 2026-27 are unchanged from the 194-series. The renaming is structural, not substantive.
Q: What happens if I use old section numbers in a challan filed after 31 March 2026?
A: The challan will be rejected by the portal. You must use Section 393 and the correct payment code for any transaction on or after 1 April 2026.
Q: What is Form 130?
A: Form 130 is the new name for Form 16 (salary TDS certificate) under the Income Tax Act 2025. Valid from 1 April 2026 onwards.
Q: What is Form 131?
A: Form 131 is the new name for Form 16A (non-salary TDS certificate) under the Income Tax Act 2025. Valid from 1 April 2026 onwards.
Q: When do I start using Section 393?
A: From 1 April 2026 (TY 2026-27 onwards). For transactions up to 31 March 2026, use old section numbers (194C, 194J, etc.) under the Income Tax Act 1961.
Q: Can I issue Form 16 for salaries earned in FY 2026-27?
A: No. Issue Form 130 for any salary TDS from 1 April 2026 onwards. Form 16 is not valid for TY 2026-27.
Q: How do I update my TDS software?
A: Contact your software vendor for an update. Provide them with the section 393 payment code mapping and verify the update handles new forms (130, 131, 133) and the new section structure before filing live.
Important: Verify Before Acting
The rates, thresholds, and payment codes provided here are based on the Income Tax Act, 2025 as of August 2026. Verify the current codes on incometax.gov.in or consult a CA before acting, as new notifications or amendments may be issued before or after 1 April 2026.
Bookmark this page – you'll need it when filing TDS returns for TY 2026-27, updating your software, and explaining the changes to your finance team and deductees.
For specific questions on how your business is affected, consult your CA or tax advisor. Tax Garden handles all TDS compliance under the new Act, including code selection, challan generation, and form issuance—so your finance team can focus on operations.
Sources: Income Tax Act, 2025; CBIC Notifications; Saral.pro; GoForFiling; TaxGuru. Rates and section numbers verified as of August 2026. This article is general guidance and not a substitute for professional tax advice.
