A look at how two of India’s most common TDS provisions work under both the old and the new tax law

For lakhs of businesses, landlords, and professionals across India, two sections of the income tax law quietly run in the background of almost every month’s accounting. One covers rent. The other covers professional and technical fees. Together, they touch everyone from a small shop owner paying rent on a showroom to a company retaining a chartered accountant or a consultant.

This year, both provisions have gone through a change that is more about address than substance. With the Income-tax Act, 2025 now in force since 1 April, the familiar Section 194-I for rent and Section 194J for professional fees have moved house. The rules, rates, and thresholds have largely stayed put. What has changed is where you find them in the law, and that distinction matters more than it sounds, especially for anyone preparing TDS returns, invoices, or compliance checklists right now.

The old rule, still very much alive for this year

Anyone finalising accounts for FY 2025-26, the year that ended on 31 March 2026, is still working entirely with the old Income-tax Act, 1961. That means Section 194-I for rent and Section 194J for professional and technical fees continue to apply in full for that year, including the tax audit season currently underway.

Under Section 194-I, a business or professional paying rent for land, a building, furniture, or fittings must deduct TDS at 10%. Rent paid for plant, machinery, or equipment attracts a lower rate of 2%. A separate, simpler provision, Section 194-IB, applies to individuals and Hindu Undivided Families who are not subject to tax audit, where the rate is lower and the compliance is lighter, aimed at tenants paying rent for a house or flat rather than running a business.

Section 194J, meanwhile, governs fees paid for professional services, technical services, royalty, and certain payments to company directors. Professional fees, which include payments to doctors, lawyers, architects, consultants, and chartered accountants, carry a TDS rate of 10%. Technical service fees are taxed at a lower 2%, a distinction that has caused its share of disputes over the years, since the line between a “professional” service and a “technical” one is not always obvious.

A significant relief arrived with the last Union Budget. From FY 2025-26, the annual threshold for TDS on rent under Section 194-I was raised sharply, from Rs 2,40,000 to or Rs 50,000 a month (Rs 6,00,000 a year,). For small shopkeepers, clinics, and startups renting modest office space, this single change meant many no longer needed to deduct TDS on rent at all. Around the same time, the threshold for professional and technical fees under Section 194J moved up from Rs 30,000 to Rs 50,000 a year, giving smaller businesses and freelancers some breathing room before TDS obligations kick in.

Enter Section 393: one number, many provisions

From 1 April 2026, income earned in what the new law calls the “Tax Year” falls under the Income-tax Act, 2025. And here is where the paperwork gets a little more involved, at least at first glance.

The scattered sections of the old TDS chapter, which ran from Section 192 through Section 196D, have been folded into two consolidated sections in the new Act. Salary TDS now sits under Section 392. Almost everything else, including rent and professional fees, has been absorbed into a single provision, Section 393, organised as a table with serial numbers for each type of payment rather than a separate section for each.

Practically, this means a tax professional filling out a TDS return or a company reviewing its deduction obligations now has to refer to Section 393 and then locate the correct table entry, rather than simply citing “194-I” or “194J” as shorthand. For rent, that is Table Sl. No. 2(ii), with the plant and machinery rate and the land and building rate sitting as separate sub-entries. For professional and technical fees, it is Table Sl. No. 6(iii), again split between the two categories.

What has not moved is the substance. The TDS rates for rent, 2% for plant and machinery, 10% for land, building, and furniture, remain unchanged. The professional fee rate of 10% and the technical fee rate of 2% also continue as before. The thresholds raised in the last Budget, Rs 6,00,000 a year for rent and Rs 50,000 a year for professional fees, carry forward into the new Act without alteration.

“The new law is a reorganisation, not a rewrite of tax policy,” is how the change is generally being described by practitioners working through the transition. The government’s own stated intention behind the new Act was to simplify language and remove outdated provisions, not to alter the economics of TDS compliance that businesses have followed for years.

Why the transition date matters more than it seems

The trickier part is not the rate, but timing. Businesses with ongoing contracts, be it an office lease signed years ago or a retainer with a consultant, need to be careful about which law governs a particular payment.

The settled position, as tax advisories circulating this year have clarified, works on the date of credit and the date of payment, not the date a contract was originally signed. If rent or a professional fee was credited in the books, or paid, before 31 March 2026, the old Act and its familiar section numbers apply. If both the credit and the actual payment happen on or after 1 April 2026, the new Act and Section 393 apply, even if the underlying agreement was signed years earlier under the old regime.

This creates an unusual but manageable situation for accountants closing out FY 2025-26 right now, in October, while simultaneously deducting TDS for the current Tax Year under a different section number. Payroll and accounts software used by most firms has already been updated to reflect the new section references, but manual records, old invoice templates, and internal compliance checklists referring to “194-I” or “194J” by name will need updating to avoid confusion, particularly when queried by a landlord or a vendor asking which provision applies to their payment.

A note on compliance basics that have not changed

Regardless of which Act applies, certain fundamentals remain exactly as they were. TDS must still be deducted either at the time of credit to the payee’s account or at the time of payment, whichever happens earlier. The deducted amount must be deposited with the government within the prescribed time, generally by the seventh of the following month. Quarterly TDS returns still need to be filed, and TDS certificates, Form 16A for non-salary deductions, still need to be issued to the person whose tax was deducted.

Failure to deduct, or deducting but not depositing TDS on time, continues to attract interest and can lead to disallowance of the related expense while computing taxable income, a consequence that often costs businesses far more than the TDS amount itself. These penal provisions have been retained under the new Act, carried over with updated numbering rather than altered in effect.

What businesses and professionals should do now

Tax advisors working through this year’s transition generally recommend a few practical steps. First, update internal templates, vendor agreements, and accounting software references from the old section numbers to Section 393 for any payment relating to the current Tax Year, while keeping the old references intact for anything relating to FY 2025-26. Second, review rent agreements to confirm which payments still fall below the Rs 50,000 monthly threshold and therefore attract no TDS at all, since smaller landlords in particular are often unaware of the higher limit introduced last year. Third, revisit the classification of payments to consultants and service providers, since the 10% versus 2% distinction between professional and technical services remains a frequent source of error, carried forward unchanged into the new law.

For professionals receiving payments, whether doctors, consultants, architects, or chartered accountants, it is worth checking that TDS certificates reflect the correct deductor details and that the amounts match what shows up in the annual tax statement, now issued under a new form number following the broader overhaul of the Income-tax Rules.

The bottom line

For anyone wondering whether rent or professional fees will suddenly attract a different tax burden this year, the answer is reassuring: they will not. The rates stand where they stood. The thresholds, raised generously in the last Budget, remain in place. What has genuinely changed is the citation, Section 194-I and Section 194J giving way to Section 393, tucked inside the restructured framework of the Income-tax Act, 2025.

The real risk this year lies not in the law itself but in paperwork drifting out of sync with it, old references lingering in templates, contracts, and internal notes long after the underlying provision has moved. For businesses and professionals alike, a quiet afternoon spent updating those references now will save a good deal of confusion later.