Complete Section-wise Guide with Summary Tables

The Income Tax Act, 2025 has introduced a new system of TDS and TCS payment codes (1001–1092), replacing the earlier section-based approach under the 1961 Act. Each type of transaction is now mapped to a specific payment code, making compliance more structured but also more sensitive to errors.

This change aims to improve accuracy, standardisation, and reporting, but it also increases the importance of selecting the correct code for each transaction. Any mistake may lead to short deduction, interest, penalties, and notices.

This article provides a complete, easy-to-understand, and professional breakdown of all major TDS and TCS payment codes along with summary tables for practical use.

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Section 392 – Salary Payment Codes (1001–1004)

Section 392 replaces Sections 192 and 192A of the old Act and covers all salary-related payments, including EPF withdrawals.

Key Points:

• Applicable for salary and EPF-related deductions
• Reported in Form 138
• Code 1004 (EPF withdrawal) is also used in Form 144 for non-residents

Summary Table – Salary Payments

Code	Section	Nature of Payment	Old Section	Rate
1001	392	Salary – Govt Employees (other than Union Govt.)	192	Slab
1002	392	Salary – Employees other than Government employees	192	Slab
1003	392	Salary – Union Government employees	192	Slab
1004	392(7)	EPF Withdrawal – accumulated balance	192A	10%

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Section 393(1) – Payments to Residents (1005–1038)

This is the largest category, covering all non-salary TDS deductions on payments to resident taxpayers. These are reported in Form 140.

The section is structured into multiple categories such as commission, rent, property, investment income, interest, contracts, professional fees, dividends, and miscellaneous payments.

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Commission & Brokerage

Code	Nature of Payment	Old Section	Rate
1005	Insurance Commission	194D	5%
1006	Commission or Brokerage (other than insurance)	194H	5%

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Rent Payments

Code	Nature of Payment	Old Section	Rate
1007	Rent by Individual/HUF (₹50,000/month or more)	194IB	2%
1008	Rent of Plant, Machinery or Furniture	194I(a)	2%
1009	Rent of Land, Building or Furniture	194I(b)	10%

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Immovable Property

Code	Nature of Payment	Old Section	Rate
1010	Transfer of Immovable Property	194IA	1%
1011	Joint Development Agreement (JDA)	194IC	10%
1012	Compensation on compulsory acquisition	194LA	10%

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Investment Income

Code	Nature of Payment	Old Section	Rate
1013	Income from Mutual Fund units	194K	10%
1014	Business Trust – Interest	194LBA	10%
1015	Business Trust – Dividend	194LBA	10%
1016	Business Trust – Rent	194LBA	10%
1017	AIF Income	194LBB	10%
1018	Securitisation Trust Income	194LBC	25%

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Interest Payments

Code	Nature of Payment	Old Section	Rate
1019	Interest on Securities	193	10%
1020	Bank/Post Office Interest – Senior Citizen	194A	10%
1021	Bank/Post Office Interest – Others	194A	10%
1022	Interest by other payers (non-bank)	194A	10%

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Contracts & Professional Fees

Important Change:

Old Section 194J has been split into multiple codes, making classification more critical.

Code	Nature of Payment	Old Section	Rate
1023	Contract – Individual/HUF	194C	1%
1024	Contract – Others	194C	2%
1025	Payment by Individual/HUF (non-audit cases)	194M	2%
1026	Technical Services / Royalty / Call Centre	194J	2%
1027	Professional Fees	194J	10%
1028	Director Fees	194J	10%

⚠️ Using code 1026 instead of 1027 can result in under-deduction of TDS, leading to compliance issues.

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Dividends

Code	Nature of Payment	Old Section	Rate
1029	Dividend payments	194	10%

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Miscellaneous Payments

Code	Nature of Payment	Old Section	Rate
1030	Life Insurance (taxable portion)	194DA	5%
1031	Purchase of Goods (turnover > ₹10 Cr)	194Q	0.1%
1032	Senior Citizen Scheme	194P	Slab
1033	Perquisite/Benefit (cash)	194R	10%
1034	Perquisite/Benefit (kind/mixed)	194R	10%
1035	E-commerce transactions	194O	1%
1036	VDA – Individual/HUF	194S	1%
1037	VDA – Others	194S	1%
1038	VDA – Mixed consideration	194S	1%

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Section 393(2) – Payments to Non-Residents (1039–1057)

These codes apply to payments made to non-residents and are reported in Form 144.

Key Highlights:

• Covers interest, securities, AIF, offshore funds, GDRs, and FII income
• Code 1057 acts as a residual category (similar to old Section 195)

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Section 393(3) – Payments to Any Person (1058–1067)

Applicable to both residents and non-residents.

Summary Table

Code	Nature of Payment	Old Section	Rate
1058–1059	Lottery/Gambling winnings	194B	30%
1060–1061	Online gaming winnings	194BA	30%
1062	Horse race winnings	194BB	30%
1063	Lottery commission	194G	5%
1064–1065	Cash withdrawals	194N	2%
1066	NSS payments	194EE	10%
1067	Partner payments	194T	10%

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Section 394 – TCS Codes (1068–1092)

Section 394 replaces Section 206C and expands the scope of TCS, especially on luxury goods.

Key Change:

TCS is now applicable on several new luxury items, including:

• Watches
• Art pieces
• Bags and shoes
• Sunglasses
• Home theatre systems
• Horses (polo/racing)

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Summary Table – TCS Codes

Traditional Goods

Code	Nature	Rate
1068–1074	Liquor, timber, scrap, minerals	1%–5%

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Motor Vehicle & Luxury Goods

Code	Nature	Rate
1075	Motor vehicle	1%
1076–1085	Luxury goods	1%

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LRS & Overseas Tour

Code	Nature	Rate
1086	Education/medical remittance	0.5%
1087	Other remittances	20%
1088–1089	Overseas tour packages	5% / 20%

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Other Categories

Code	Nature	Rate
1090–1092	Parking, toll, mining	2%

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Conclusion

The new TDS and TCS payment code system under the Income Tax Act, 2025 represents a significant shift towards structured and transparent compliance.

However, it requires:

• Careful identification of the nature of payment
• Accurate mapping with the correct payment code
• Special attention to professional vs technical classifications

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