Introduction
From FY i.e. TY 2026-27, the landscape of Tax Deducted at Source (TDS) compliance has undergone a major update with the introduction of new section codes. These codes are now mandatory for deductors to select while making TDS payments, ensuring precise categorization of transactions and improved reconciliation with returns. The change is aimed at eliminating ambiguity, strengthening audit trails, and aligning reporting with the revised Income-tax Act, 2025.
Let’s go through the list of section codes!
Section Codes- Income Tax Act, 2025
Salary:
| Section | Rate |
| Payment to Government employees other than Union Government employees – 392 – 1001 | – |
| Payment of Employees other than Government Employees – 392 – 1002 | – |
Other than salary – resident payee/ deductee:
| Section | Rate |
| Payment of accumulated balance due to an employee – 392(7) – 1004 | – |
| Commission or brokerage – insurance – 393(1) [Table: Sl. No. 1(i)] – 1005 | 2% in case for Individual 10% in case for Others |
| Commission or brokerage – others – 393(1) [Table: Sl. No. 1(ii)] – 1006 | 2% |
| Rent on machinery etc. – specified person – 393(1) [Table: Sl. No. 2(ii).D(a)] – 1008 | 2% |
| Rent other than machinery etc. – specified person – 393(1) [Table: Sl. No. 2(ii).D(b)] – 1009 | 10% |
| Payment on any consideration, not being consideration in kind, under the agreement referred to in section 67(14). – 393(1) [Table: Sl. No. 3(ii)] – 1011 | 10% |
| Payment of Compensation on Acquisition of Certain Immovable Property – 393(1) [Table: Sl. No. 3(iii)] – 1012 | 10% |
| Income payable to a resident assessee in respect of Units of a specified Mutual Fund specified under Schedule VII [Table: Sl. No. 20 or 21] or units from the Administrator of the specified undertaking or units from specified company – 393(1) [Table: Sl. No. 4(i)] – 1013 | 10% |
| Certain income in the form of interest from units of a business trust to a resident unit holder – 393(1) [Table: Sl. No. 4(ii)] – 1014 | 10% |
| Certain income in the form of dividend from units of a business trust to a resident unit holder – 393(1) [Table: Sl. No. 4(ii)] – 1015 | 10% |
| Certain income in the form of Renting from units of a business trust being a real estate investment trust to a resident unit holder – 393(1) [Table: Sl. No. 4(ii)] – 1016 | 10% |
| Any income, other than that proportion of income which is exempt under Schedule V [Table: Sl. No. 2], in respect of units of an investment fund specified in section 224, payable to its unitholder – 393(1) [Table: Sl. No. 4(iii)] – 1017 | 10% |
| Any income, in respect of an investment in a securitisation trust specified in section 221 to an investor – 393(1) [Table: Sl. No. 4(iv)] – 1018 | 10% |
| Any income by way of Interest on securities – 393(1) [Table: Sl. No. 5(i)] – 1019 | 10% |
| Any income by way of interest other than interest on securities, in case of deductee/payee is a senior citizen – 393(1) [Table: Sl. No. 5(ii).D(a)] – 1020 | 10% |
| Any income by way of interest other than interest on securities, in case of deductee/payee is other than senior citizen – 393(1) [Table: Sl. No. 5(ii).D(b)] – 1021 | 10% |
| Any income being interest other than interest on securities – 393(1) [Table: Sl. No. 5(iii)] – 1022 | 10% |
| Any sum for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a designated person – if contractor is individual or Hindu undivided family. – 393(1) [Table: Sl. No. 6(i).D(a)] – 1023 | 1% in case for Individual 2% in case for Others |
| Any sum for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a designated person – if contractor is a person other than individual or Hindu undivided family – 393(1) [Table: Sl. No. 6(i).D(b)] – 1024 | 1% in case for Individual 2% in case for Others |
| Any sum by way of–– (a) fees for technical services (not being a professional services); or (b) royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films; or (c) payee, engaged only in the business of operation of call centre – from Specified person – 393(1) [Table: Sl. No. 6(iii).D(a)] – 1026 | 2% |
| Any sum by way of–– (a) fees for professional services; or (b) any sum referred to in section 26(2)(h) – from Specified person – 393(1) [Table: Sl. No. 6(iii).D(b)] – 1027 | 10% |
| Any sum by way of remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 392, to a director of a company – from Specified person – 393(1) [Table: Sl. No. 6(iii).D(b)] – 1028 | 10% |
| Any dividends (including on preference shares) declared – 393(1) [Table: Sl. No. 7] – 1029 | 10% |
| Any sum under a life insurance policy, including the sum allocated as bonus on such policy, other than the amount not includible in the total income under Schedule II [Table: Sl. No. 2] – 393(1) [Table: Sl. No. 8(i)] – 1030 | 2% |
| Any sum for purchase of any goods – 393(1) [Table: Sl. No. 8(ii)] – 1031 | 0.10% |
| Payment to Specified Senior Citizen – 393(1) [Table: Sl. No. 8(iii)] – 1032 | 10% |
| Any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession of any resident – 393(1) [Table: Sl. No. 8(iv)] – 1033 | 10% |
| Sale of goods or provision of services by an e-commerce participant, facilitated by an e-commerce operator through its digital or electronic facility or platform. – any e commerce operator – 393(1) [Table: Sl. No. 8(v)] – 1035 | 0.10% |
| Any sum by way of consideration for transfer of a virtual digital asset by other than Individual or Hindu Undivided Family – 393(1) [Table: Sl. No. 8(vi)] – 1037 | 1% |
| Any income by way of winnings (other than winnings from Sl. No. 2 of the table at section 393(3)) from – (a) any lottery; or (b) crossword puzzle; or (c) card game and other game of any sort; or (d) gambling or betting of any form or nature whatsoever – 393(3) [Table: Sl. No. 1] – 1058 | 30% |
| Any income by way of winnings from online game – 393(3) [Table: Sl. No. 2] – 1060 | 30% |
| Any income by way of winnings from any horse race – 393(3) [Table: Sl. No. 3] – 1062 | 30% |
| Any income, credited or paid to a person, who is or has been stocking, distributing, purchasing or selling lottery tickets, by way of commission, remuneration or prize (by whatever name called) on such tickets – 393(3) [Table: Sl. No. 4] – 1063 | 30% |
| Payment of certain amounts in cash by bank/ post office / co-operative society to a deductee being a co-operative society – 393(3) [Table: Sl. No. 5.D(a)] – 1064 | 2% |
| Payment of certain amounts in cash by bank/ post office / co-operative society to a deductee being a person other than co-operative society – 393(3) [Table: Sl. No. 5.D(b)] – 1065 | 2% |
| Any amount referred to in section 80CCA(2)(a) of the Income-tax Act, 1961 (43 of 1961) – 393(3) [Table: Sl. No. 6] – 1066 | 10% |
| Any sum in the nature of salary, remuneration, commission, bonus or interest paid to a partner of the firm or credited to his account (including capital account) – 393(3) [Table: Sl. No. 7] – 1067 | 10% |
Payment to non-residents:
| Section | Rate |
| Payment of accumulated balance due to an employee – 392(7) – 1004 | 10% |
| Any income referred to in section 211 – 393(2) [Table: Sl. No. 1] – 1039 | 20% |
| Any income by way of interest payable in respect of monies borrowed in foreign currency from a source outside India,— (a) under a loan agreement or issue of long term infrastructure bond on or after the 1st July, 2012 but before the 1st July, 2023; or (b) by way of issue of any long-term bond on or after the 1st October, 2014 but before the 1st July, 2023 which is approved by the Central Government in this behalf. – 393(2) [Table: Sl. No. 2] – 1040 | 5% |
| Any income by way of interest payable in respect of monies borrowed from a source outside India by way of issue of rupee denominated bond before the 1st July, 2023. – 393(2) [Table: Sl. No. 3] – 1041 | 5% |
| Any income by way of interest payable in respect of monies borrowed from a source outside India by way of issue of any long-term bond or rupee denominated bond, which is listed only on a recognised stock exchange located in any International Financial Services Centre. – Issued on or after the 1st April, 2020 but before the 1st July, 2023 – 393(2) [Table: Sl. No. 4.E(a)] – 1042 | 4% |
| Any income by way of interest payable in respect of monies borrowed from a source outside India by way of issue of any long-term bond or rupee denominated bond, which is listed only on a recognised stock exchange located in any International Financial Services Centre – Issued on or after the 1st July, 2023. – 393(2) [Table: Sl. No. 4.E(b)] – 1043 | 9% |
| Income by way of Interest from Infrastructure debt fund payable to a Non-Resident – 393(2) [Table: Sl. No. 5] – 1044 | 5% |
| Any distributed income referred to in section 223, being of the nature referred to in Schedule V [Table: Sl. No. 3.B(a)] – 393(2) [Table: Sl. No. 6.E(a)] – 1045 | 5% |
| Any distributed income referred to in section 223, being of the nature referred to in Schedule V [Table: Sl. No. 3.B(b)] – 393(2) [Table: Sl. No. 6.E(b)] – 1046 | 10% |
| Any distributed income referred to in section 223, being of the nature referred to in Schedule V [Table: Sl. No. 4]. – 393(2) [Table: Sl. No. 7] – 1047 | 35% – For Non Residents Company 30% – For Non Residents other than companies |
| Any income, other than that proportion of income which is exempt under Schedule V [Table: Sl. No. 2], in respect of units of an investment fund specified in section 224. – 393(2) [Table: Sl. No. 8] – 1048 | 35% – For Non Residents Company 30% – For Non Residents other than companies |
| Any income in respect of an investment in a securitisation trust specified in section 221. – 393(2) [Table: Sl. No. 9] – 1049 | 35% – For Non Residents Company 30% – For Non Residents other than companies |
| Any income— (a) in respect of units of a Mutual Fund specified under Schedule VII [Table: Sl. No. 20] or [Table: Sl. No. 21]; or (b) from the specified company. – 393(2) [Table: Sl. No. 10] – 1050 | 20% |
| Any income in respect of units referred to in section 208. – 393(2) [Table: Sl. No. 11] – 1051 | 10% |
| Any income by way of long-term capital gains arising from the transfer of units referred to in section 208. – 393(2) [Table: Sl. No. 12] – 1052 | 12.50% |
| Any income by way of interest or dividends in respect of bonds or Global Depository Receipts referred to in section 209. – 393(2) [Table: Sl. No. 13] – 1053 | 10% |
| Any income by way of long-term capital gains arising from the transfer of bonds or Global Depository Receipts referred to in section 209. – 393(2) [Table: Sl. No. 14] – 1054 | 12.50% |
| Income of foreign institutional investors from securities – 393(2) [Table: Sl. No. 15] – 1055 | 20% |
| Income of specified fund from securities – 393(2) [Table: Sl. No. 16] – 1056 | 10% |
| Any interest (not being interest referred to against Sl. Nos. 2, 3, 4 and 5) or any other sum chargeable under the provisions of this Act, not being income chargeable under the head “Salaries”. – 393(2) [Table: Sl. No. 17] – 1057 | – |
| Any income by way of winnings (other than winnings from Sl. No. 2 of the table at section 393(3)) from – (a) any lottery; or (b) crossword puzzle; or (c) card game and other game of any sort; or (d) gambling or betting of any form or nature whatsoever – 393(3) [Table: Sl. No. 1] – 1058 | 30% |
| Any income by way of winnings from online game – 393(3) [Table: Sl. No. 2] – 1060 | 30% |
| Any income by way of winnings from any horse race – 393(3) [Table: Sl. No. 3] – 1062 | 30% |
| Any income, credited or paid to a person, who is or has been stocking, distributing, purchasing or selling lottery tickets, by way of commission, remuneration or prize (by whatever name called) on such tickets – 393(3) [Table: Sl. No. 4] – 1063 | 2% |
| Payment of certain amounts in cash by bank/ post office / co-operative society to a deductee being a co-operative society – 393(3) [Table: Sl. No. 5.D(a)] – 1064 | 2% |
| Payment of certain amounts in cash by bank/ post office / co-operative society to a deductee being a person other than co-operative society – 393(3) [Table: Sl. No. 5.D(b)] – 1065 | 2% |
| Any amount referred to in section 80CCA(2)(a) of the Income-tax Act, 1961 (43 of 1961) – 393(3) [Table: Sl. No. 6] – 1066 | 10% |
| Any sum in the nature of salary, remuneration, commission, bonus or interest paid to a partner of the firm or credited to his account (including capital account) – 393(3) [Table: Sl. No. 7] – 1067 | 10% |
TCS:
| Section | Rate |
| Sale of alcoholic liquor for human consumption. – 394(1) [Table: Sl. No. 1] – 1068 | 2% |
| Sale of tendu leaves – 394(1) [Table: Sl. No. 2] – 1069 | 2% |
| Sale of timber obtained under a forest lease – 394(1) [Table: Sl. No. 3] – 1070 | 2% |
| Sale of timber obtained by any mode other than a forest lease – 394(1) [Table: Sl. No. 3] – 1071 | 2% |
| Sale of any other forest produce (not being timber or tendu leaves) obtained under a forest lease. – 394(1) [Table: Sl. No. 3] – 1072 | 2% |
| Sale of Scrap – 394(1) [Table: Sl. No. 4] – 1073 | 2% |
| Sale of minerals, being coal or lignite or iron ore – 394(1) [Table: Sl. No. 5] – 1074 | 2% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of motor vehicle – 394(1) [Table: Sl. No. 6(a)] – 1075 | 1% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of wrist watch – 394(1) [Table: Sl. No. 6(b)] – 1076 | 1% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of art piece such as antiques, painting, sculpture – 394(1) [Table: Sl. No. 6(b)] – 1077 | 1% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of collectibles such as coin, stamp – 394(1) [Table: Sl. No. 6(b)] – 1078 | 1% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of yacht, rowing boat, canoe, helicopter – 394(1) [Table: Sl. No. 6(b)] – 1079 | 1% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of pair of sunglasses – 394(1) [Table: Sl. No. 6(b)] – 1080 | 1% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of bag such as handbag, purse – 394(1) [Table: Sl. No. 6(b)] – 1081 | 1% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of pair of shoes – 394(1) [Table: Sl. No. 6(b)] – 1082 | 1% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of sportswear and equipment such as golf kit, ski-wear – 394(1) [Table: Sl. No. 6(b)] – 1083 | 1% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of home theatre system – 394(1) [Table: Sl. No. 6(b)] – 1084 | 1% |
| Sale consideration exceeding Rs.10,00,000 in case of sale of horse for horse racing in race clubs and horse for polo – 394(1) [Table: Sl. No. 6(b)] – 1085 | 1% |
| Remittance under the Liberalised Remittance Scheme of an amount or aggregate of the amounts exceeding Rs.10,00,000 for purposes of education or medical treatment – 394(1) [Table: Sl. No. 7.D(a)] – 1086 | 2% |
| Remittance under the Liberalised Remittance Scheme of an amount or aggregate of the amounts exceeding Rs.10,00,000 for purposes other than education or medical treatment – 394(1) [Table: Sl. No. 7.D(b)] – 1087 | 20% |
| Sale of “overseas tour programme package” including expenses for travel or hotel stay or boarding or lodging or any such similar or related expenditure with amount or aggregate of amounts up to Rs.10,00,000. – 394(1) [Table: Sl. No. 8.D(a)] – 1088 | 2% |
| Sale of “overseas tour programme package” including expenses for travel or hotel stay or boarding or lodging or any such similar or related expenditure with amount or aggregate of amounts above Rs.10,00,000. – 394(1) [Table: Sl. No. 8.D(b)] – 1089 | 2% |
| Use of parking lot for the purpose of business, excluding mining and quarrying of mineral oil (including petroleum and natural gas). – 394(1) [Table: Sl. No. 9] – 1090 | 2% |
| Use of toll plaza for the purpose of business, excluding mining and quarrying of mineral oil (including petroleum and natural gas). – 394(1) [Table: Sl. No. 9] – 1091 | 2% |
| Use of mine or quarry for the purpose of business, excluding mining and quarrying of mineral oil (including petroleum and natural gas). – 394(1) [Table: Sl. No. 9] – 1092 | 2% |
Conclusion
The shift to new section codes for TDS payments in FY 2026-27 marks a decisive step toward streamlined compliance and greater transparency. Deductors must now carefully select the appropriate code for every transaction, as this will directly impact reporting accuracy and claim validation. By familiarizing themselves with the updated list and integrating it into their payment processes, taxpayers can ensure smooth compliance and reduce the risk of mismatches. In short, the new section codes are not just a procedural requirement; they are the foundation of a more robust and accountable TDS framework.
Blog By – Mittal & Co.