Comparative Analysis of TDS / TCS Provisions under Income Tax Act, 1961 vs New Income Tax Bill, 2025
This note provides a comprehensive comparison between the existing provisions under the Income Tax Act, 1961 and the corresponding clauses in the proposed Income Tax Bill, 2025, as tabled in Parliament. It highlights key structural changes, simplifications, and deletions introduced in the new framework, particularly concerning Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). The comparative chart summarizes section-wise differences, focusing on retention, omission, or consolidation of provisions. The new Bill consolidates most TDS/TCS sections under Clauses 392 to 394.
Key Highlights of the New Income Tax Bill (TDS/TCS Framework)
- 🟩 Retained: Majority of TDS and TCS sections remain unchanged in rate and threshold.
- 🟧 Modified/Consolidated: Provisions such as Sec. 195 and Sec. 197 are unified for simplicity.
- Clauses 392 to 394 house all TDS/TCS provisions in the new Bill.
Detailed Sectionwise Comparative Chart – TDS
| Nature of Payment | Old Section | New Clause | Rate (Old) | Rate (New) | Threshold | Change | Remarks |
| Salary | Sec. 192 (ITA 1961) | Clause 392(1)(a) (New Bill) | Slab rates | Slab rates | N/A | Retained | Terminology change to ‘Tax Year’; employer may pay tax on perquisites. |
| Accumulated balance (PF) | Sec. 192A | Clause 392(6) | 10% if >= ₹50,000 | 10% if >= ₹50,000 | ₹50,000 | Retained | Threshold retained; consolidated. |
| Interest on securities | Sec. 193 | Clause 393(1)(5)(i) | Rates in force; threshold ₹10,000 | Rates in force; threshold ₹10,000 | ₹10,000 | Retained | Mapped to consolidated table; no material change. |
| Interest (other than securities) | Sec. 194A | Clause 393(1)(5)(ii)/(iii) | Rates in force; thresholds (₹40k/₹50k) | Rates in force; thresholds retained | ₹40,000/₹50,000 (senior cit.) | Retained | Consolidated; same exemptions retained. |
| Dividend | Sec. 194 | Clause 393(1)(7) | 10% | 10% | Nil | Retained | Mapped to table; wording simplified. |
| Contractor payments | Sec. 194C | Clause 393(1)(6)(i) | 1% (ind/HUF) / 2% (others); ₹30k/₹1L | Same | ₹30,000 per contract; ₹1,00,000 aggregate | Retained | Rates & thresholds retained; clause merged under consolidated table. |
| Professional / Technical fees | Sec. 194J | Clause 393(1)(6)(iii) | 10%; threshold ₹30,000 | 10%; threshold retained | ₹30,000 | Retained | Consolidated with related service payments. |
| Rent (land/building / machinery) | Sec. 194I | Clause 393(1)(2) | 10% (land/building) / 2% (machinery); threshold ₹2.4L | Same | ₹2,40,000 | Retained | Split rates retained; definitions standardized. |
| Transfer of immovable property | Sec. 194-IA | Clause 393(1)(3)(i) | 1% on consideration or stamp duty value; threshold ₹50L | 1% on consideration or stamp duty value; threshold retained | ₹50,00,000 | Retained | Stamp-duty value explicitly referenced in New Bill mapping. |
| Compensation on compulsory acquisition | Sec. 194LA | Clause 393(1)(3)(iii) | 10% | 10% | Nil | Retained | Procedural consolidation; rate retained. |
| Income in respect of units / Mutual funds | Sec. 194K / related | Clause 393(1)(4) | 10% | 10% | Nil | Retained | Consolidated trust/unit income under single table entry. |
| Purchase of goods (buyer collection) | Sec. 194Q | Clause 393(1)(8)(ii) | 0.1% beyond ₹50L; buyer turnover > ₹10 cr | 0.1% beyond ₹50L; buyer turnover > ₹10 cr | ₹50,00,000; turnover ₹10 crore | Retained | Retained; included in consolidated commercial transactions. |
| E‑commerce payments / sales | Sec. 194-O | Clause 393(1)(8)(v) | 0.1% on gross; operator deemed payer | 0.1% on gross; operator deemed payer | Nil | Retained | Precedence clarified for digital receipts; operator liable. |
| Benefits / Perquisites | Sec. 194R | Clause 393(1)(8)(iv) | 10% above ₹20,000 | 10% above ₹20,000 | ₹20,000 | Retained | Explicit coverage for cash/kind; retained. |
| Virtual Digital Assets (VDA) | Sec. 194S | Clause 393(1)(8)(vi) | 1% (no threshold) | 1% (no threshold) | Nil | Retained | Scope broadened to ‘digital representations of value’ in New Bill mapping. |
| Payments to non‑residents (interest/royalty/FTS) | Sec. 195 | Clause 393(2) | Rates in force / DTAA | Rates in force / DTAA; composite clause | Nil | Modified | Simplified composite clause for non‑resident payments & procedural clarity. |
| Payments to partners (remuneration) | Not in classic ITA (some later inserts) | New provision in New Bill (partner payments entry) | — | 10% (as per new provision) | Nil | New | New explicit TDS on partner remuneration/interest included in consolidated framework. |
| Failure to furnish PAN (higher rate) | Sec. 206AA | Clause 393(3) | Higher of 20% or twice the rate | Higher of 20% or twice the rate | N/A | Retained | PAN absence consequences retained and integrated. |
| Nil / Lower deduction certificates (s.197) | Sec. 197 | Provisions in New Bill (applications/395) | Nil / lower earlier | Lower deduction certificate retained; nil certificate removed | N/A | Modified | New Bill removes ‘nil’ certificate; only lower-deduction certificate remains. |
| TDS for online games winnings | Sec. 194BA (inserted) | Mapped in Clause 393 table | Rates in force | Rates in force | Nil | Retained/Modified | Rules for net winnings and withdrawals clarified. |
| Winnings from lottery / horse race | Sec. 194B / 194BB | Mapped in Clause 393 table | Rates in force; thresholds adjusted | Rates in force | ₹10,000 per transaction | Retained | Online game winnings moved to separate clause (194BA) earlier; New Bill maps these. |
Detailed Section wise Comparative Chart – TCS
Nature of Payment |
Old Section |
New Clause |
Rate (Old) |
Rate (New) |
Threshold |
Change |
Remarks |
Alcoholic liquor for human consumption |
Sec. 206C(1)(a) |
Clause 394(1)(a) |
1% |
1% |
Nil |
Retained |
Mapped into new Bill table; rate retained. |
Tendu leaves |
Sec. 206C(1)(b) |
Clause 394(1)(b) |
5% |
5% |
Nil |
Retained |
Retained. |
Timber / forest produce |
Sec. 206C(1)(c)/(d) |
Clause 394(1)(c) |
2% / 2.5% |
2% / 2.5% |
Nil |
Retained |
Consolidated under clause 394. |
Scrap |
Sec. 206C(1)(d) |
Clause 394(1)(d) |
1% |
1% |
Nil |
Retained |
Retained. |
Minerals (coal, lignite, iron ore) |
Sec. 206C(1)(e) |
Clause 394(1)(e) |
1% |
1% |
Nil |
Retained |
Retained. |
Sale of goods (general TCS) |
Sec. 206C(1H) |
Clause 394(2) |
0.1% on consideration > ₹50L; seller turnover > ₹10 cr |
0.1% retained; turnover limit retained |
₹50,00,000; turnover ₹10 crore |
Retained |
Retained; reporting simplified in new Bill. |
Motor vehicle > ₹10 lakh |
Sec. 206C(1F) |
Clause 394(2)(b) mapping |
1% |
1% |
Nil |
Retained |
Part of general clause. |
Overseas tour packages |
Sec. 206C(1G)(a) |
Clause 394(3)(a) |
5% |
5% |
Nil |
Retained |
Mapped; definition clarified. |
Foreign remittance / LRS |
Sec. 206C(1G)(b) |
Clause 394(3)(b) |
5% (exceptions exist) |
5% (harmonised language) |
Nil |
Retained |
Aligned with FEMA terminology. |
E‑commerce / digital collections |
Sec. 206C(1I) |
Clause 394(4) |
1% |
1% |
Nil |
Retained |
Consolidated with digital receipts clause. |
Higher TCS in absence of PAN |
Sec. 206CC |
Clause 394(6) mapping |
Higher of 5% or twice the rate |
Higher of 5% or twice the rate |
N/A |
Retained |
PAN related higher rates retained. |
Exempt buyers (Govt, RBI, Embassies) |
Sec. 206C(1A)/(1B)/(1C) |
Clause 394(5) |
Exemptions preserved |
Exemptions preserved |
N/A |
Retained |
All exemptions merged under clause 394. |
Conclusion
The New Income Tax Bill, 2025 emphasizes structural simplification rather than rate changes. It consolidates all TDS/TCS provisions under unified chapters with consistent terminology and compliance procedures.
Prepared by :
Figment Global Solutions Pvt. Ltd. |