New Income-tax Act 2025: What TDS Changes Mean for Small Businesses
Published: 10/9/2026
Category: Tax
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. For most small businesses, TDS rates did not change, but section numbers, forms and codes did. What to update in your books and software.
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. For most small businesses, the important news is that TDS rates largely stayed the same, but the section numbers, form names and reporting codes changed. TDS provisions are now grouped under a consolidated section (reported as section 393) instead of the familiar 194-series. If your software, vouchers or vendor communication still use the old references, it is time to update them.
What changed and what did not
| Area | Changed? | What it means for you |
|---|
| TDS rates on common payments (contractors, rent, professional fees) | Largely unchanged | Keep deducting at the rates you know, after checking any threshold updates |
| Section references | Yes | "194C", "194J" and similar now map to the new structure |
| Forms and returns | Yes, names and formats | TDS returns and certificates follow new forms |
| Thresholds for some payments | Some raised | Fewer small deductions in some categories; check each one |
| Transactions before 1 April 2026 | Old Act continues | Old liabilities, challans and certificates remain valid |
Why "only numbering changed" still matters
TDS is reported with codes. A wrong section code on a challan or return creates mismatches in Form 26AS-style statements for your vendors and notices for you. The risk is not paying the wrong rate; it is reporting the right payment in the wrong place.
A practical update checklist
- Ask your CA for a mapping table from the old sections you use (for example, contractor payments, professional fees, rent) to the new provisions.
- Update your accounting or billing software so TDS ledgers and reports use the new references. Ask your vendor whether an update is available.
- Update vendor master data: PAN, TDS category and thresholds.
- Check payment workflows for contractors and professionals, so TDS is deducted at the time of credit or payment as required.
- Communicate with vendors whose deduction category or threshold changed.
- Keep old-Act records separate for payments and liabilities before 1 April 2026.
Payments small businesses commonly deduct TDS on
- Contractors and sub-contractors
- Professional and technical fees
- Rent for premises or equipment
- Commission and brokerage
Whether TDS applies depends on the payer's status, the amount and thresholds. Your CA should confirm your obligations.
Related: paying MSME suppliers on time
The rule disallowing expenses when payments to registered micro and small enterprises are delayed beyond the allowed period (up to 45 days with a written agreement) also continues in the new law in its own numbering. If you buy from MSMEs, keep due dates visible.
Where BizFlow fits
BizFlow's accounting and billing apps keep vendor PAN and TDS categories on file, and reports can be updated to the new references so your CA works from clean data. See AccountFlow.
Frequently asked questions
Q: Did TDS rates change under the Income-tax Act, 2025?
A: For most common payments, rates stayed largely the same. The main changes are section numbers, forms, codes and some thresholds. Confirm specific payments with your CA.
Q: Do I need to revise TDS returns for last year?
A: Transactions before 1 April 2026 continue under the old Act. The new structure applies from 1 April 2026.
Sources
Home | Blog