The transition from the Income-tax Act, 1961 to the Income-tax Act, 2025 has brought major changes in the TDS payment process from 1st April 2026. While taxpayers are initially confused with the replacement of familiar sections like 194C and 194J by new Section 393 schedule codes, the government has introduced a simplified "Single Challan" system that allows multiple TDS payments in one challan. This article explains how the new system works, the important TDS codes and rates for FY 2026-27 and how taxpayers can avoid compliance mistakes during the transition.
Arjuna (Fictional Character): Krishna, taxpayers are worried that making TDS payments will become more tedious now. Is it actually getting easier or more difficult?
Krishna (Fictional Character): Arjuna, from 1st April 2026 the department had enabled new functionality for making TDS payments on the Income Tax portal. The government has introduced an option to make payments of multiple sections in a single challan.
Arjuna (Fictional Character): Krishna, what is the biggest relief for a taxpayer who has to pay TDS under multiple heads at once?
Krishna (Fictional Character): Arjuna, the "Single Challan" facility is a major shift toward efficiency. Under the old 1961 Act, a taxpayer often had to file separate challans for different sections, which meant dealing with multiple OTP verifications and repetitive data entry for each payment. The 2025 Act now allows a taxpayer to combine multiple section codes into one single combined payment. For example, a business can now pay for both contract services and professional fees in one go, which reduces paperwork and saves significant time.
Arjuna (Fictional Character): Krishna, but many are confused because the old sections were so easy to remember. Now there are complex references like Section 393 schedule serial numbers. Isn't that making it harder for a taxpayer?
Krishna (Fictional Character): Arjuna, earlier, there were distinct sections like 194C or 194J, which were easy to identify while making payments. Now, most resident payments are clubbed under Section 393(1) with different serial numbers and schedules. While this new structure creates initial confusion, it actually groups similar payments together. For Tax Year 2026-27, a taxpayer must strictly select "Income Tax Act 2025" on the portal to access these new codes, which range from 1001 to 1092. Selecting the old Act for new payments will lead to incorrect challans and non-compliance.
Arjuna (Fictional Character): Krishna, what are some common rates taxpayers should keep in mind to avoid getting lost in this new complexity?
Krishna (Fictional Character): Arjuna, for common payments like non-government salaries under Code 1002, the tax remains as per slab rates. Rent on buildings under Code 1009 attracts a 10% rate, while contract payments for an individual taxpayer under Code 1023 are kept at 1%. Professional fees in the 10% category now fall under Codes 1027 or 1028, and the purchase of goods remains at 0.1% under Code 1031.
Arjuna (Fictional Character): Krishna, what should taxpayers learn from this?
Krishna (Fictional Character): Arjuna, while the structure has changed from simple sections to detailed schedules, the basic principles of compliance remain the same. A taxpayer should focus on the future and keep a reference guide nearby that compares the old 1961 Act sections with the new 2025 Act codes to avoid mistakes during payment. Trust the transition, update systems to the new 2025 codes, and remember that staying updated is the best way to ensure compliance is easy rather than tedious!
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