Summary
- The Income Tax Act, 2025 introduces a significant risk of 30% disallowance for businesses due to incorrect TDS code selection under Section 393, effective from April 1, 2026.
- Selecting Code 1026 instead of Code 1027 can lead to this penalty, as the new structure may not allow the same judicial protections as the old Act.
- With no current CBDT guidance on the implications of wrong code selection, thousands of deductors face uncertainty ahead of their Q1 TDS returns due in July 2026.
- Urgent clarification is needed from CBDT to prevent substantial financial penalties for good-faith errors in TDS classification.
Join the discussion ā sign up to comment, upvote, and save articles.