Past Assessments of Firms, Tax Deduction at Source and Advance Tax

Section 189A of the Income-tax Act, 1961 is a historical transition provision for firm assessments up to Assessment Year 1992-93. Section 190 laid down the general principle that income-tax could be recovered through deduction or collection at source and advance payment before regular assessment. From 1 April 2026, current TDS, TCS and advance-tax obligations are governed by the Income-tax Act, 2025.

Section 189A: Provisions applicable to past assessments of firms

Section 189A provided that, for those assessment years, the provisions of the relevant Chapter as they stood immediately before 1 April 1993 would continue to apply. Its function was therefore transitional: it preserved the earlier firm-assessment regime for assessment years that preceded the partnership taxation changes effective from 1 April 1993.

This section should not be treated as a current rule for assessment of firms in Tax Year 2026-27 onward. It remains relevant when examining old assessments, historical liabilities, litigation or other proceedings to which the preserved provisions apply.

Section 190 of the Income-tax Act, 1961

Deduction at source and advance payment

Section 190 established the general rule that even though regular assessment of income would occur later, tax on that income could be payable in advance through deduction or collection at source, advance tax, or the other payment mechanism specified in that Chapter. It also made clear that this method of earlier recovery did not prejudice the underlying charge of income-tax.

Current TDS rules under the Income-tax Act, 2025

The Income-tax Act, 2025 reorganises the withholding provisions. Section 392 deals with deduction of tax from salary, while Section 393 consolidates TDS on other specified payments in tabular form. For transactions on or after 1 April 2026, the relevant item under the new provisions should be used rather than an old 1961 Act section number such as Section 194C, Section 194H or Section 194J.

For transition purposes, the governing law for TDS generally depends on when the relevant event of payment or credit occurs. Amounts whose applicable payment or credit event occurred on or before 31 March 2026 remain governed by the Income-tax Act, 1961, while events occurring on or after 1 April 2026 are governed by the Income-tax Act, 2025.

Tax Collection at Source under the 2025 Act

The TCS provisions are consolidated in Section 394 of the Income-tax Act, 2025. The transition principle similarly distinguishes events occurring up to 31 March 2026 from those occurring on or after 1 April 2026.

Advance tax under the Income-tax Act, 2025

The basic advance-tax framework continues under the new Act. Section 404 provides the threshold rule: advance tax is payable where the amount of tax payable during the tax year, computed under the advance-tax provisions, is Rs. 10,000 or more. Section 405 provides the computation framework for advance-tax liability, with succeeding provisions dealing with payment and instalments.

Advance tax for Tax Year 2026-27 is governed by the Income-tax Act, 2025. By contrast, liabilities relating to Financial Year 2025-26 and Assessment Year 2026-27 remain governed by the Income-tax Act, 1961, including consequential interest arising from defaults relating to that earlier period.

1961 Act and 2025 Act: practical transition

Related Income Tax provisions

Joint and several liability of partners and dissolved firms: Sections 188A and 189

Direct payment and salary TDS: Sections 191 and 192

Accumulated employee balance and interest on securities: Sections 192A and 193

Interest other than interest on securities: Section 194A

For compliance after 1 April 2026, identify the relevant Tax Year and transaction date before selecting the applicable Act and section.