TDS Under New Income Tax Act 2025: Section 393 Codes, Forms & Rules in Punjab

Reviewed by Kinsmen Corporate Advisory Group · Published 10 November 2026

Quick Answer (Executive Summary):
Enacted to modernize direct tax jurisprudence, the Income-tax Act, 2025 replaces the six-decade-old 1961 statute effective 1 April 2026. The new Act restructures Tax Deducted at Source (TDS) under unified provisions: Section 392 and Section 393. Key procedural changes include replacing former Section 194J, 194C, and 194T with Sections 393(1), 393(2), and 393(3), introducing Form 130 (replacing Form 16), consolidating quarterly returns into Form 141 (replacing 24Q/26Q), and establishing Form 168 as the master credit statement.

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Key Takeaways

• Effective Date: The Income-tax Act, 2025 takes statutory effect on 1 April 2026 for all withholding obligations.
• Unified Section 393: Consolidates over 30 scattered TDS provisions of the 1961 Act into structured subsections with rationalized thresholds.
• Core Replacements: Section 393(1) covers resident payments such as professional fees (old 194J) and contractors (old 194C); Section 393(2) covers non-resident payments (old 195); Section 393(3) covers partner remuneration (old 194T).
• Form 130 Salary Certificate: Replaces former Form 16 with an electronic certificate issued within 15 days of annual return filing.
• Form 141 Consolidated Return: Unifies quarterly payroll (old 24Q) and commercial payments (old 26Q) into a single quarterly filing.
• Form 168 Master Credit View: Replaces Form 26AS and AIS with a centralized tax credit statement.
• Disallowance Rule: The old Section 40(a)(ia) rule, carried into the 2025 Act, continues the mandatory 30% expenditure disallowance for missed TDS.

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Why Was the Withholding Framework Overhauled in the Income-tax Act, 2025?

The Income-tax Act, 1961 had accumulated over 30 separate sections governing Tax Deducted at Source (Sections 192 through 195). Each section maintained distinct thresholds, variable rates (0.1%, 1%, 2%, 5%, 10%, 20%, 30%), and fragmented quarterly return formats (Forms 24Q, 26Q, 27Q, 27EQ).

This statutory fragmentation caused significant compliance friction for finance managers, accounting desks, and small businesses in Punjab.

The Income-tax Act, 2025 establishes a simplified, two-tier withholding architecture:

1. Section 392 (General Obligation): Codifies the legal duty of any person responsible for paying specified sums to deduct income tax at source.
2. Section 393 (Payment Matrix & Rates): Standardizes payment categories, de-minimis exemption thresholds, and applicable withholding percentages.

Explore our comprehensive quarterly management on our TDS Return Filing desk.

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Master Mapping: Old 1961 Act Sections vs New 2025 Act Sections

To help accountants, CFOs, and business owners in Punjab transition their ERP and Tally ledgers, here is the statutory cross-reference table:

Payment Category	Old 1961 Act Section	New 2025 Act Section	Standard TDS Rate	Threshold Limit
Salaries & Wages	Section 192	Section 393(Sal)	Average slab rate	Basic exemption slab
Professional / Technical Fees	Section 194J	Section 393(1)	2% (tech) / 10% (prof)	₹50,000 / year
Contractor & Sub-Contractor	Section 194C	Section 393(1)	1% (Ind/HUF) / 2% (Co)	₹30,000 single / ₹1,00,000 agg
Partner Salary, Bonus, Remuneration	Section 194T	Section 393(3)	10%	₹20,000 / year
Rent on Land, Building & Machinery	Section 194I	Section 393(4)	2% (plant) / 10% (land)	₹2,40,000 / year
Commission & Brokerage	Section 194H	Section 393(5)	5% (rationalized to 2%)	₹20,000 / year
Self-Declaration (No TDS)	Form 15G / 15H	Section 393(6)	0%	Total income below taxable slab

For lower withholding certificates, review our Lower TDS Certificate Advisory.

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New Statutory Withholding Forms: 130, 141, and 168

The 2025 Act replaces the legacy form numbering system with unified digital certificates:

                  [Employer / Business Deductor]
                                |
                  Files Quarterly Form 141 Return
                   (Consolidates old 24Q and 26Q)
                                |
          ---------------------------------------------
          |                                           |
    [To Employees]                             [To Income Tax Portal]
       Form 130                                      Form 168
  (Replaces Form 16                              (Replaces Form 26AS/AIS
   Salary Certificate)                            Master Tax Credit View)

1. Form 130 (Replaces Form 16)

• Unified Structure: Eliminates the split between Part A (TRACES generated) and Part B (annexure generated by employer). Form 130 is issued as a single, electronically verified document.
• Issuance Timeline: Must be delivered to employees on or before 15 June following the end of the financial year.

2. Form 141 (Replaces Forms 24Q & 26Q)

• Single Quarterly Filing: Deductors no longer maintain separate return files for salary payments and non-salary vendor payments. Form 141 consolidates all deductions under Sections 393(1) through 393(5).
• Due Dates: 31 July (Q1), 31 October (Q2), 31 January (Q3), and 31 May (Q4).

3. Form 168 (Replaces Form 26AS & AIS Tax Ledger)

• Unified Credit Statement: Form 168 integrates TDS deducted by employers, commercial deductors, TCS from vehicle or scrap purchases, and self-assessment challans into a real-time ledger accessible via PAN credentials.

For partnership firm withholding compliance, see our specialized analysis on Section 194T & 393(3) Partner Remuneration Rules.

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Section 393(3): Partner Remuneration & TDS for Partnership Firms & LLPs

Under former Section 194T of the 1961 Act, introduced in recent Finance Acts, partnership firms and LLPs became liable to deduct 10% TDS on all salary, bonus, commission, and capital interest paid to partners.

Under the Income-tax Act, 2025, this withholding rule is established under Section 393(3):

• Mandatory Withholding: 10% TDS must be deducted at the time of credit to the partner’s account (including capital or current ledger) or payment in cash/cheque, whichever is earlier.
• ₹20,000 Threshold: If total remuneration, salary, interest, and bonus credited to a partner in a financial year exceeds ₹20,000, TDS applies to the entire cumulative sum.
• Exempt Profit Share: Distribution of the firm’s net profit share (exempt under Section 10(2A) of the old Act and Section 14 of the new Act) is outside the scope of Section 393(3).

Visit our dedicated Section 194T TDS Practice to review partnership deed clauses.

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Step-by-Step Transition Checklist for Accounting Desks in Punjab

To prepare your accounting software and ledgers for the 1 April 2026 cut-off, follow this systematic implementation plan:

1. Step 1: Audit Vendor Master Ledgers
   Reclassify vendor master records in Tally Prime, Zoho Books, or SAP with the new Section 393 codes: Section 393(1) for resident professional fees and contracts (each with its own payment code), 393(2) for non-resident payments, and 393(3) for partner accounts.
2. Step 2: Collect Updated Declarations u/s 393(6)
   Obtain fresh self-declarations from resident vendors and senior citizens qualifying for zero-withholding, verifying PAN operational status.
3. Step 3: Update Monthly Remittance Workflows
   Ensure monthly tax deductions are deposited by the 7th of the following month (30 April for March deductions) via e-Pay Tax using valid TAN credentials.
4. Step 4: Prepare Quarterly Reconciliation for Form 141
   Match book expense ledgers with Challan payment BSR codes before uploading Form 141 quarterly returns.
5. Step 5: Verify Partner Deed Authorizations
   Review partnership agreements to ensure remuneration clauses explicitly state the method of calculation and authorize statutory withholding under Section 393(3).

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Disallowance & Penalties Under the Income-tax Act, 2025

Non-compliance with the restructured withholding provisions carries severe corporate tax implications:

Statutory Default	2025 Act Section	Statutory Penalty / Consequence
Failure to Deduct or Deposit TDS	Old 40(a)(ia), carried into the 2025 Act	30% of expenditure disallowed in computing business profits
Interest on Non-Deduction	Section 398(1) (old 201(1A))	Mandatory interest at 1% per month from due date until deduction
Interest on Non-Payment	Section 398(2) (old 201(1A))	Mandatory interest at 1.5% per month from deduction until actual deposit
Late Filing of Form 141 Return	Section 439 (old 234E)	Mandatory fee of ₹200 per day for each day of default
Failure to Issue Form 130 / Certificates	Section 445 (old 272A)	Penalty of ₹500 per day of delay after statutory deadline

If your enterprise requires structural tax optimization, explore our Corporate Tax Planning services.

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Local Punjab Guidance: Patiala, Sangrur, Mohali & Ludhiana

The transition to Section 393 impacts key commercial ecosystems across Punjab:

• Ludhiana Industrial Sub-Contractors: Engineering fabricators, spinning mills, and auto ancillary units must update contractor withholding from Section 194C to Section 393(1), monitoring the ₹30,000 single and ₹1,00,000 aggregate invoice limits.
• Patiala & Nabha Trading Partnerships: Agricultural machinery dealers and grain traders structured as partnership firms must automate Section 393(3) withholding on partner salary and interest before year-end accounts close.
• Mohali Technology & Consulting Companies: Software developers and IT exporters must ensure foreign vendor remittances and domestic professional retainer contracts transition cleanly to Section 393(1).
• Sangrur Rice Shellers & Grain Elevators: Paddy processing contracts and transportation agreements must be audited for accurate TDS deduction under Section 393(1).

Kinsmen Corporate Services provides comprehensive corporate tax compliance for enterprises across Patiala, Sangrur, Mohali, and Ludhiana from our Amargarh headquarters.

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Frequently Asked Questions

When does the new Income-tax Act, 2025 come into force, and how does it change TDS?

The Income-tax Act, 2025 comes into formal statutory force on 1 April 2026. It consolidates and simplifies dozens of scattered withholding sections from the 1961 Act into structured sections: Section 392 (general duty to deduct) and Section 393 (specific payment categories, thresholds, and withholding rates).

What are the new Section 393 equivalents for old sections 194C, 194J, and 194T?

Under the 2025 Act: Section 393(1) covers payments to residents, including old Section 194J (professional and technical fees) and old Section 194C (contractors); Section 393(2) covers payments to non-residents (old Section 195); and Section 393(3) replaces old Section 194T (payments of salary, bonus, interest, and remuneration to partners in firms and LLPs).

What is Form 130 and Form 141 under the new statutory framework?

Form 130 is the simplified annual salary TDS certificate issued to employees, replacing former Form 16 Part A and Part B. Form 141 is the unified quarterly withholding tax return that consolidates former Form 24Q (salaries) and Form 26Q (non-salary payments) into a single electronic submission.

What form replaces Form 26AS and AIS under the Income-tax Act, 2025?

Form 168 is the comprehensive Annual Tax Statement under the new Act. It replaces former Form 26AS, integrating verified tax deductions, tax collections at source (TCS), advance tax remittances, and self-assessment tax credits into a single real-time ledger.

How are declarations for zero deduction (old Form 15G / 15H) handled under Section 393?

Self-declarations for non-deduction of tax by resident individuals and senior citizens are codified under Section 393(6) of the 2025 Act, replacing former Form 15G and Form 15H. The portal provides an electronic validation mechanism linked to the taxpayer’s PAN to prevent invalid claims.

What is the penalty for failing to deduct or deposit TDS under the 2025 Act?

Failure to deduct or deposit TDS triggers a 30% expenditure disallowance under the new Act’s equivalent of old Section 40(a)(ia) when computing business taxable profits, alongside mandatory interest at 1% to 1.5% per month under Section 398 (old Section 201(1A)) and daily late filing fees under Section 439.

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Official Government Portals & Statutory Sources

• Income Tax Department of India: incometax.gov.in — Withholding tax returns (TRACES) and e-Pay Tax gateway.
• Central Board of Direct Taxes (CBDT): incometaxindia.gov.in — Income-tax Act, 2025 notifications and Section 393 circulars.
• Protean / NSDL Tax Portal: protean-tinpan.com — TAN verification, Challan ITNS 281 tracking, and TDS statement downloads.

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Transition Your TDS Compliance with Kinsmen

Prepare your enterprise for the Income-tax Act, 2025 without disruption. Speak directly with our direct tax practice team in Amargarh to update accounting workflows, review partner deeds, and file Form 141 returns.

• Direct Phone: +91 99143-14949
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• Office Location: Shop No. 1, Nabha Malerkotla Road, Amargarh – 148022, District Malerkotla, Punjab
• Online Form: Request a TDS Compliance Consultation