Key Takeaways
- The old Section 194 series is replaced by numeric payment codes 1001 to 1092 grouped under three parent sections: 392 (salary), 393 (non-salary), and 394 (TCS).
- 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.
- The Act that applies depends on the "earlier of credit or payment" test. If the earlier event is on or before March 31, 2026, the 1961 Act and old section codes still apply. If on or after April 1, 2026, the 2025 Act and new codes apply.
- A few codes (1007, 1010, 1025, 1036) are inferred from draft forms and not yet officially notified. Do not use them in returns until CBDT confirms.
If you deducted TDS in April 2026 using Section 194C on your challan, your return is defective. This is the single biggest compliance trap facing accountants this quarter, and it is catching out both finance teams and mid-tier software still serving old dropdowns.
This guide gives you the cross-reference table, the Q4 transition rule, and the step-by-step for generating a clean challan under the new system.
Looking for expert help with TDS filing and quarterly return support under the Income Tax Act 2025? The team at TaxGarden helps Indian SMEs stay compliant end-to-end — filings, notices, and advisory, all in one place.
Why TDS Codes Changed
The Income Tax Act 2025, effective April 1, 2026, did not just renumber a few sections. It collapsed the entire sprawling Section 192 to 194T structure of the 1961 Act into three parent sections:
- Section 392 covers TDS on salaries (replacing old Section 192).
- Section 393 covers every non-salary TDS payment to residents, non-residents, and "any person" (replacing 194A, 194C, 194H, 194I, 194J, 194K, 194N, 194Q, 194R, 194S, and every other 194-series provision).
- Section 394 covers Tax Collection at Source (replacing old Section 206C).
Instead of naming each payment type by section, the new Act assigns each payment a numeric code in a structured range. There are 92 codes in total: 42 for resident TDS, 19 for non-resident TDS, and 25 for TCS (with a small number of inferred codes awaiting formal notification).
Code Ranges at a Glance
| Code Range | Parent Section | Payment Category | Return Form |
|---|---|---|---|
| 1001 to 1004 | 392 | Salary TDS | Form 138 |
| 1005 to 1038 | 393(1) | Non-salary payments to residents | Form 140 |
| 1039 to 1057 | 393(2) | Payments to non-residents | Form 144 |
| 1058 to 1067 | 393(3) | Winnings, cash withdrawals, partner payments | Form 140 |
| 1068 to 1092 | 394 | TCS on specified goods and services | Form 143 |
Cross-Reference Table: Old Sections to New Codes
The table below covers the 12 most frequent payments where accountants need to act this week. Rates are as notified for FY 2026-27 and carry forward most 1961 Act thresholds.
| Old Section | Payment Type | New Code | New Section | Rate |
|---|---|---|---|---|
| 192 | Salary | 1001 | 392 | Slab |
| 192A | Premature EPF withdrawal | 1004 | 392 | 10% |
| 194A | Interest (other than securities) by banks | 1008 | 393(1) | 10% |
| 194A | Interest by others (resident) | 1009 | 393(1) | 10% |
| 194C | Contractor payment to individual or HUF | 1005 | 393(1) | 1% |
| 194C | Contractor payment to others (company, firm) | 1006 | 393(1) | 2% |
| 194H | Commission or brokerage | 1014 | 393(1) | 2% |
| 194I | Rent on plant or machinery | 1016 | 393(1) | 2% |
| 194I | Rent on land, building, furniture | 1017 | 393(1) | 10% |
| 194J | Fees for technical services, royalty on cinematograph films, call centre | 1026 | 393(1) | 2% |
| 194J | Professional fees, director remuneration | 1027 / 1028 | 393(1) | 10% |
| 194Q | Purchase of goods above ₹50 lakh | 1029 | 393(1) | 0.1% |
Caveat on inferred codes: codes 1007, 1010, 1025, and 1036 appear in the sequence of draft Form 140 entries but have not been individually notified by CBDT as of April 2026. If your transaction maps to any of these, wait for the official notification or escalate to your tax consultant rather than guessing.
The Q4 FY 2025-26 Transition Rule
This is where most accountants are tripping. The trigger for applying the old Act versus the new Act is not the date you deposit TDS. It is the earlier of the credit event (when you credit the payee in your books) and the payment event (when you actually pay).
- Earlier event on or before March 31, 2026: the 1961 Act applies. Use the old section numbers on the challan, even if you deposit the TDS in April 2026. File the corresponding TDS return on the old Form 24Q, 26Q, 27Q, or 27EQ.
- Earlier event on or after April 1, 2026: the 2025 Act applies. Use the new numeric code. File the corresponding return on the new Form 138, 140, 143, or 144.
Worked case: You credited a contractor ₹5 lakh in your books on March 28, 2026 and actually paid on April 5, 2026. The earlier event is March 28. This is an old-Act transaction. Use Section 194C on the challan even though the deposit happens in April, and report it on Form 26Q for Q4 FY 2025-26.
A second case: You credited and paid an architect ₹1 lakh on April 4, 2026. Both events are post-April 1. Use code 1027 under Section 393(1) on the challan, and report on Form 140 for Q1 FY 2026-27.
Mixing old and new Act transactions on a single challan will fail validation. Keep the two streams separate at the challan level.
How to Generate a Challan Under the New System
Log into incometax.gov.in, then navigate to e-File > e-Pay Tax.
- Click New Payment.
- Select Income Tax Act, 2025 (the portal now shows both Acts; picking 1961 is correct only for old-Act transactions).
- Choose the parent section: 392, 393, or 394.
- From the dropdown, pick the specific payment code that matches your transaction. The portal shows the code number, the old-section equivalent in brackets, and the applicable rate.
- Enter the deductee PAN, the amount paid or credited, the TDS amount, and the deduction date.
- Pay via net banking, NEFT/RTGS, debit card, or UPI and save the challan.
The BSR code and challan serial number from the receipt are what you later quote in Form 138 / 140 / 143 / 144 when filing the quarterly return.
Form Changes You Cannot Skip
| Old Form (1961 Act) | New Form (2025 Act) | What It Reports |
|---|---|---|
| Form 24Q | Form 138 | Quarterly TDS on salaries |
| Form 26Q | Form 140 | Quarterly TDS on non-salary payments to residents |
| Form 27Q | Form 144 | Quarterly TDS on payments to non-residents |
| Form 27EQ | Form 143 | Quarterly TCS |
| Form 16 | Form 139 | Annual TDS certificate to salaried employees |
| Form 16A | Form 141 | TDS certificate for non-salary payments |
Most accounting and payroll software is still updating code libraries and form templates through April and May 2026. If your vendor has not shipped an update, do not file on old forms as a workaround. The correct fallback is the income tax portal's native utility, which is live with the new codes.
Common Mistakes to Avoid
- Using old section numbers on new-Act transactions. Any post-April-1 transaction filed with 194C or 194J on the challan will be treated as a defective return and will block the payee's 26AS credit.
- Mixing old and new Act transactions on one challan. Generate separate challans for pre-April and post-April transactions.
- Using inferred codes (1007, 1010, 1025, 1036) without notification. Wait for the CBDT notification or escalate to your consultant.
- Filing Form 26Q for Q1 FY 2026-27. Form 26Q is for old-Act transactions only. For Q1 FY 2026-27, use Form 140.
- Wrong form for non-resident payments. Non-resident TDS is now Form 144, not Form 140. Codes 1039 to 1057 are non-resident specific.
- Forgetting to issue the new-format certificate. A deductee whose tax was deducted under the 2025 Act is entitled to Form 139 (salary) or Form 141 (non-salary), not old Form 16 / 16A.
Let TaxGarden Handle the Code Mapping
Across a mid-size SME with 50 to 200 vendor payments a month, manually mapping each payment to the correct code, generating the right challan, and filing on the right form creates a single-point-of-failure for vendor 26AS credits across the year.
Explore TaxGarden's Compliance Standard plan. We prepare your challans with the correct new-Act codes, file Form 138 / 140 / 143 / 144 every quarter on time, and reconcile each payee's 26AS so a wrong code never becomes a notice.
Frequently Asked Questions
I deducted TDS on March 30, 2026 but will deposit in April. Which Act applies?
The 1961 Act. The trigger is the earlier of credit or payment, not the deposit date. Use the old section number (for example, 194C) on the challan and file the Q4 return on Form 26Q.
My accounting software still shows 194C. Can I use it for April 2026 transactions?
No. Any transaction where the earlier of credit or payment is on or after April 1, 2026 must use the new numeric code (for example, 1005 or 1006 for contractors). File directly on incometax.gov.in until your software updates.
Are old sections 194C, 194J, etc., gone forever?
They are repealed effective April 1, 2026 but remain legally operative for any transaction where the earlier event (credit or payment) occurred on or before March 31, 2026. You will file old-section returns for several more quarters on old forms.
What if I cannot find a code that matches my payment type?
Check whether the payment falls under any of the four listed parent sections (392, 393, 394). If still unclear, consult a tax practitioner or contact the income tax helpdesk. Do not default to an inferred code that has not been notified.
Do the rates change or just the codes?
Most rates carry forward. Contractors stay at 1% and 2%; professional fees stay at 10%; technical services at 2%; rent on land and building at 10%. A few rationalisations have happened (for example, commission under old 194H moved from 5% to 2% from October 2024, and this 2% is now under code 1014).
What is the penalty for filing on the wrong form?
A return filed on the wrong form (for example, Form 26Q for an April 2026 transaction) is treated as a defective return under Section 139(9) equivalent provisions of the 2025 Act. The deductee's 26AS credit is blocked until you re-file on the correct form.
This guide is current as of April 15, 2026 and reflects the Income Tax Act 2025 effective April 1, 2026. Code mappings, parent sections (392, 393, 394), form numbers (138, 140, 143, 144), and the credit-versus-payment transition rule have been verified against the Income Tax Department tax-payments portal (incometax.gov.in), CBDT TDS compliance guidance, and published analysis from ClearTax, TaxRoutine, FutureX Solutions, and CAclubindia. Inferred codes (1007, 1010, 1025, 1036) are flagged until CBDT issues formal notification. Confirm individual mappings on the e-Pay Tax portal before generating a live challan.
