By Vikash Khanal, Finance Manager · Updated 7 October 2026
From 1 April 2026, TDS payment codes under the Income-tax Act 2025 are four-digit codes (1001 to 1067 for TDS) that replace the old section names on the challan: for example 1027 for professional fees [194J(b)], 1024 for a contractor that is a firm or company [194C], 1009 for rent of a building [194I(b)] and 1002 for salary of non-government employees [192]. You pick the code on challan ITNS 281N in the e-Pay Tax screen and report the same code in Form 138, 140 or 144, while anything credited or paid up to 31 March 2026 stays on the old 1961 Act challan and returns.
Rates and thresholds were retained from the 1961 Act, per the CBDT's own FAQ; what changed is the vocabulary. Below are the working table, how to pick a code, the forms, worked examples and the mistakes I see most often.
Why the codes changed
The 2025 Act folds the old TDS sections into s.392 for salary [192, 192A], s.393 for everything else [193 to 196D] and s.394 for TCS [206C]. Section 393 is a set of tables: sub-section (1) for residents, (2) for non-residents and (3) for items applying to any person, such as winnings, cash withdrawals and partners' remuneration. With forty-odd payments under one section, the portal identifies each by a code. The codes are portal classifications, not numbers in the Act or Rules, so check any list, including this one, against the portal dropdown before paying.
TDS payment codes table: old section to new code
Rates are base rates for residents (no surcharge or cess). Thresholds are per payee per tax year unless stated. Without a valid PAN the rate is generally 20% (5% for purchase of goods and e-commerce) [206AA] (1961 Act reference).
| Old section | Nature of payment | 2025 Act | Code | Rate | Threshold | Statement |
|---|---|---|---|---|---|---|
| 192 | Salary: employees other than government | s.392 | 1002 | Slab (average) | Taxable salary above exemption | Form 138 |
| 192 | Salary: state government (1001) or Union Government (1003) employees | s.392 | 1001 / 1003 | Slab | As above | Form 138 |
| 192A | Accumulated PF balance | s.392(7) | 1004 | 10% | ₹50,000 | Form 140 |
| 193 | Interest on securities | s.393(1) Sl.5(i) | 1019 | 10% | ₹10,000 (some securities) | Form 140 |
| 194 | Dividend | s.393(1) Sl.7 | 1029 | 10% | ₹10,000 | Form 140 |
| 194A | Interest by bank, co-op bank, post office: senior citizen | s.393(1) Sl.5(ii) | 1020 | 10% | ₹1,00,000 | Form 140 |
| 194A | Interest by bank etc.: others | s.393(1) Sl.5(ii) | 1021 | 10% | ₹50,000 | Form 140 |
| 194A | Interest by any other payer (ICDs, unsecured loans) | s.393(1) Sl.5(iii) | 1022 | 10% | ₹10,000 | Form 140 |
| 194C | Contractor: individual or HUF | s.393(1) Sl.6(i) | 1023 | 1% | ₹30,000 single or ₹1,00,000 in year | Form 140 |
| 194C | Contractor: firm, company, others | s.393(1) Sl.6(i) | 1024 | 2% | As above | Form 140 |
| 194D | Insurance commission | s.393(1) Sl.1(i) | 1005 | 2% (company 10%) | ₹20,000 | Form 140 |
| 194H | Commission or brokerage | s.393(1) Sl.1(ii) | 1006 | 2% | ₹20,000 | Form 140 |
| 194I(a) | Rent: plant, machinery, equipment | s.393(1) Sl.2(ii) | 1008 | 2% | ₹50,000 a month | Form 140 |
| 194I(b) | Rent: land, building, furniture | s.393(1) Sl.2(ii) | 1009 | 10% | ₹50,000 a month | Form 140 |
| 194LA | Compensation on compulsory acquisition | s.393(1) Sl.3(iii) | 1012 | 10% | ₹5,00,000 | Form 140 |
| 194J(a) | Fees for technical services, call centre, film royalty | s.393(1) Sl.6(iii) | 1026 | 2% | ₹50,000 | Form 140 |
| 194J(b) | Fees for professional services, other royalty | s.393(1) Sl.6(iii) | 1027 | 10% | ₹50,000 | Form 140 |
| 194J | Director's fees or commission (not salary) | s.393(1) Sl.6(iii) | 1028 | 10% | None | Form 140 |
| 194Q | Purchase of goods (buyer turnover above ₹10 crore) | s.393(1) Sl.8(ii) | 1031 | 0.1% | Excess over ₹50 lakh per seller | Form 140 |
| 194R | Business perquisite or benefit | s.393(1) Sl.8(iv) | 1033 / 1034 | 10% | ₹20,000 | Form 140 |
| 194-O | E-commerce operator to participant | s.393(1) Sl.8(v) | 1035 | 0.1% | ₹5 lakh (individual/HUF) | Form 140 |
| 194S | Virtual digital asset (payer other than specified person) | s.393(1) Sl.8(vi) | 1037 / 1038 | 1% | ₹10,000 (₹50,000 specified) | Form 140 |
| 194B | Lottery, crossword, card game winnings | s.393(3) Sl.1 | 1058 | 30% | ₹10,000 per transaction | Form 140 / 144 |
| 194N | Cash withdrawal (non-co-operative payee) | s.393(3) Sl.5 | 1065 | 2% | ₹1 crore | Form 140 / 144 |
| 194T | Salary, interest, commission to partners | s.393(3) Sl.7 | 1067 | 10% | ₹20,000 | Form 140 / 144 |
| 195 | Other sums payable to a non-resident | s.393(2) Sl.17 | 1057 | Act or DTAA rate | None | Form 144 |
| 194IA / 194IB / 194M / 194S (individuals) | Property purchase, rent, contract or professional fees by non-audited individual or HUF, VDA | s.393(1) | Set by Form 141 verify | 1% / 2% / 2% / 1% | ₹50 lakh / ₹50,000 a month / ₹50 lakh / none | Form 141 |
Codes checked on 7 October 2026 against TallyHelp and TaxGuru lists. Find any single code faster with the TDS code finder, and work out the deduction with the TDS calculator.
How to choose the code on the challan
Since 1 April 2026 the portal has two challans. ITNS 281N is for tax deducted under the 2025 Act (tax year 2026-27 onwards). The old ITNS 281 remains for deductions under the 1961 Act. The path is e-File, e-Pay Tax, select the applicable Act, New Payment.
- Act: the 2025 Act only if the earlier of credit or payment fell on or after 1 April 2026.
- Minor head: 200 (TDS payable by taxpayer) for the monthly deposit; 400 (regular assessment) only for a departmental demand.
- Deductee class: separate challans for company and non-company deductees, and for residents and non-residents.
- Codes: up to 20 per challan under minor head 200, each with its own tax, interest and fee.
- Classify by the payment, not the payee. A CA firm doing an audit is 1027; the same firm supplying staff is 1024. For contractors, a PAN with P or H as the fourth character means 1023; anything else 1024.
Form 138, 140 and 144: where each code is reported
| Form (2025 Act) | Replaces | Covers | Due dates, tax year 2026-27 |
|---|---|---|---|
| Form 138 | 24Q | Salary, s.392 (codes 1001 to 1003) | 31 July, 31 October, 31 January, 31 May |
| Form 140 | 26Q | Resident non-salary TDS, s.393(1) and (3) | Same quarterly dates |
| Form 144 | 27Q | Non-resident TDS, s.393(2) and (3) | Same quarterly dates |
| Form 141 | 26QB, 26QC, 26QD, 26QE | Challan-cum-statement filed with PAN | 30 days from the end of the month of deduction |
Deposit is due by the 7th of the following month, and by 30 April for deductions made in March. Late deduction carries interest at 1% a month and late deposit 1.5% a month under s.398 [201(1A)]; a late statement attracts ₹200 a day under s.427 [234E], capped at the tax. The TDS interest calculator counts the months the TRACES way. Certificates are now Form 130 [Form 16] and Form 131 [Form 16A].
Worked examples
1. A month's challan for a company
In May 2026 a company pays its statutory auditor's firm ₹1,20,000 (professional fees), a civil contractor (private limited) ₹4,50,000 and the landlord of its office (a company) ₹75,000 rent.
| Payment | Code | Amount (₹) | Rate | TDS (₹) |
|---|---|---|---|---|
| Professional fees to CA firm | 1027 | 1,20,000 | 10% | 12,000 |
| Civil contractor (company) | 1024 | 4,50,000 | 2% | 9,000 |
| Office rent (company landlord) | 1009 | 75,000 | 10% | 7,500 |
The CA firm is a partnership, a non-company deductee; the contractor and the landlord are companies. That means two challans by 7 June 2026: one non-company challan with code 1027 for ₹12,000, and one company challan with codes 1024 and 1009 for ₹16,500. All three lines go into Form 140 for Q1, due 31 July 2026.
2. Rent just under the monthly threshold
A branch office rented at ₹45,000 a month (₹5,40,000 a year) attracts no TDS: the threshold is ₹50,000 a month, not a year. If rent rises to ₹52,000 from October, deduct 10% (₹5,200) under 1009 from October only.
3. An individual contractor crossing the annual limit
A proprietor bills ₹28,000 in each of April, June, August and October 2026. No bill crosses ₹30,000, but October takes the year to ₹1,12,000, above ₹1,00,000, so 1% is due on the whole ₹1,12,000: ₹1,120 under code 1023, deducted from the October payment.
4. Late deposit
₹12,000 deducted on 20 May 2026 and deposited on 9 June (due 7 June) carries interest from the date of deduction, part months counting in full: 1.5% × 2 × ₹12,000 = ₹360, paid under the same code in the interest column.
Transition: deductions straddling 31 March 2026
The CBDT's TDS compliance FAQ is clear: the Act that governs is the one in force on the earlier of credit or payment. So:
- Credited or paid (including advances) by 31 March 2026: 1961 Act. Deduct under the old section, pay on ITNS 281 by 30 April 2026, and report in Form 26Q (or 24Q, 27Q) for Q4 of FY 2025-26, due 31 May 2026. Year-end provisions credited to the party fall here too.
- Running contracts and monthly retainers: old Act up to and including 31 March 2026, new Act from 1 April 2026.
- Annual thresholds: the tax year 2026-27 is a fresh year. Aggregation for s.393 [194C, 194J] starts from zero on 1 April 2026 verify.
- Corrections for old quarters go in the old forms; never move a 1961 Act deduction into Form 140.
- Lower deduction certificates issued under the old s.197 are worth checking for validity into tax year 2026-27 before you rely on them verify.
Common mistakes
- Wrong Act on the challan. An April 2026 deduction paid on ITNS 281 will not match Form 140; March provisions paid on 281N fail the other way.
- 1026 versus 1027. Technical services and call-centre fees are 2% (1026); professional services are 10% (1027). Legal, audit, architecture and consulting are professional; decide once per contract and record it in the vendor master.
- Directors. A whole-time director's salary goes under s.392 with code 1002. Sitting fees and commission to a non-executive director are 1028, with no threshold.
- Using minor head 400 for a normal monthly payment. That money sits against a demand and not against your deductions.
- Treating rent as annual. The rent threshold is monthly.
- Manpower supply. From 1 April 2026 manpower supply is expressly "work", so it is 1023 or 1024, not 1027.
For the wider calendar see the compliance hub; the templates page has a TDS monthly working for tax year 2026-27 with this code map built in, and terms such as CIN and minor head are in the glossary.
Frequently asked questions
Can one challan carry more than one payment code?
Yes. Up to 20 codes under minor head 200, but company and non-company deductees, and residents and non-residents, need separate challans.
Which code do I use for fees paid to a chartered accountant or lawyer?
Code 1027, fees for professional services, s.393(1) [194J(b)], at 10% once payments to that person cross ₹50,000 in the tax year.
Which code applies to a contractor that is a partnership firm or company?
Code 1024, payments to contractors other than individual or HUF, s.393(1) [194C], at 2%. Use 1023 at 1% only where the contractor is an individual or HUF, which you can read from the fourth character of the PAN (P or H).
An invoice was booked on 28 March 2026 and paid in April 2026. Which Act applies?
The 1961 Act. TDS is governed by the earlier of credit or payment, so the March credit decides it. Pay on ITNS 281 by 30 April 2026 and report in Form 26Q for Q4 of FY 2025-26.
I selected the wrong payment code on a challan. Is the money lost?
No. The tax is credited to your TAN. Correct the code through challan correction where possible, report the deduction under the right code in the statement, and do not pay twice.
Do individuals paying rent or buying property need these codes?
Usually not. Individuals and HUFs not liable to audit deduct under s.393 [194IA, 194IB, 194M] and pay through Form 141, a challan-cum-statement filed with their PAN. The form fixes the nature of payment for them.
Sources
- Income Tax Department, TDS compliance FAQ (transition, rates retained, Form 141)
- Income Tax Department, Create challan through TAN login (ITNS 281N, minor heads, 20 codes per challan)
- Income Tax Department, Form 141 FAQs
- Income Tax Department, Section 427, Income-tax Act 2025
- TallyHelp, TDS nature of payments as per Income Tax Act 2025
- TaxGuru, TDS challan nature of payment codes