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New TDS, TCS rules from April 1, 2025: What you need to know
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4 min read | Updated on February 27, 2025, 19:07 IST
SUMMARY
Apart from various TDS thresholds, several other changes related to TDS/TCS have been proposed in the finance bill 2025.
Section 206CCA, which provides for the collection of tax at higher rates if the payee fails to furnish his return of income for a specified period, has been proposed to be omitted. | Image source: Shutterstock
The Finance Bill 2025 has proposed several changes to the rules related to tax deducted at source (TDS) and tax collected at source (TCS).
These rules, which were announced in Budget 2025, will come into effect from April 1, 2025.
The Finance Bill 2025 has proposed to increase the threshold limit for deduction of tax for various provisions. The threshold limits are as follows:
| Section | Nature of income | Current threshold | Proposed threshold |
|---|---|---|---|
| 193 | Interest on securities | Nil | ₹10,000 |
| 193 | Interest payable to resident individual/HUF on any debenture issued by public company | ₹5,000 | ₹10,000 |
| 194 | Dividend | ₹5,000 for individual shareholder | ₹10,000 for individual shareholder |
| 194A | Interest other than interest on securities | - ₹50,000 for senior citizen - ₹40,000 in case of others if payer is a bank, cooperative society and post office - ₹5,000 in other cases | - ₹1,00,000 for senior citizen - ₹50,000 in case of others if payer is a bank, cooperative society and post office - ₹10,000 in other cases |
| 194B | Winning from Lotteries, Crossword Puzzles, gambling, betting, etc. (except online games) | Aggregate of amounts exceeding ₹10,000 during the financial year | ₹10,000 in respect of a single transaction |
| 194BB | Winning from horse race | Aggregate of amounts exceeding ₹10,000 during the financial year | ₹10,000 in respect of a single transaction |
| 194D | Insurance commission | ₹15,000 | ₹20,000 |
| 194G | Commission and other payments on sale of lottery tickets | ₹15,000 | ₹20,000 |
| 194H | Commission and Brokerage | ₹15,000 | ₹20,000 |
| 194-I | Rent | ₹2,40,000 during the financial year | ₹50,000 per month or part of a month |
| 194J | Royalty and fees for professional or technical services | ₹30,000 | ₹50,000 |
| 194K | Income in respect of units of mutual fund | ₹5,000 | ₹10,000 |
| 194LA | Compensation on account of compulsory acquisition of an immovable property (other than agriculture land) | ₹2,50,000 | ₹5,00,000 |
Apart from various TDS thresholds, several other changes related to TDS/TCS have been proposed in the finance bill. Following are some of the most important changes for individual taxpayers:
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The TDS rate under Section 194LBC on income payable by a securitisation trust to a resident investor has been proposed to be reduced from 25%/30% to 10%.
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Section 206AB, which provides for the deduction of tax at higher rates if the payee fails to furnish his return of income for a specified period, has been proposed to be omitted. Consequently, its reference in Section 194S has also been proposed to be omitted.
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Section 206CCA, which provides for the collection of tax at higher rates if the payee fails to furnish his return of income for a specified period, has been proposed to be omitted.
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The threshold limit prescribed under Section 206C (1G) for collection of tax at source by authorised dealer from remittance made under Liberalised Remittance Scheme (LRS) and seller of an overseas tour program package is proposed to be increased from ₹7 lakh. to ₹10 lakh.
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It has also been proposed that the authorised dealer shall not collect TCS under Section 206C(1G) on remittances in foreign currency from an education loan obtained under Section 80E(3)(b).
Once the Finance Act 2025 is passed by the Parliament, the above-mentioned proposals will take effect from April 1, 2025, and apply from Assessment Year (AY) 2025-26 onwards.
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