New TDS Rules Under Income Tax Act 2025: Section 393 Explained

India’s tax system is moving to a new structure under the Income Tax Act, 2025. A major update affects how TDS is deducted on contractor and professional payments, which now fall under Section 393. These rules become effective from 1 April 2026.

Payments to Contractors

Professional & Technical Services

High-Value Payments by Individuals/HUF

• TDS Rate: 2%
• Applies when payments exceed ₹50 lakh in a financial year

• Manpower supply is treated as contractor work with lower TDS rates.
• Some advertising services may fall under professional service rules.
• Extra TDS for non-filers has been removed, but PAN is still mandatory.

• Update accounting software for new section mapping.
• Verify vendor PAN details.
• Review manpower and service contracts.
• Train finance teams on updated rates.

The new structure simplifies TDS rules but requires preparation. Understanding the updated rates and classifications now will help businesses transition smoothly in April 2026.