Limits raised for TDS, TCS in Budget 2025
Finance Minister Smt. Nirmala Sitharaman presented the Union Budget 2025-26 on Feb 1, 2025, in the parliament with the theme “Sabka Vikas”.
The proposal in the budget for 2025 made a raise in limits for tax deducted and collected at source (TDS & TCS), providing benefits to senior citizens, landlords, foreign travellers, consultants and students as they will get to save more. This will not only reduce the tax burden but will also allow individuals and businesses to increase their cash flow.
Limits for TDS
| S. No | Section | Nature of income | Current threshold | Proposed threshold |
| 1 | 193 | Interest on securities | Nil | Rs. 10,000/- |
| 2 | 193 | Interest payable to resident individual/HUF on any debenture issued by public company | Rs. 5,000/- | Rs. 10,000/- |
| 3 | 194A | Interest other than Interest on securities | Rs. 50,000/- for senior citizen; | Rs. 1,00,000/- for senior citizen |
| Rs. 40,000/- in case of others when payer is bank, cooperative society and post office | Rs. 50,000/- in case of others when payer is bank, cooperative society and post office | |||
| Rs. 5,000/- in other cases | Rs. 10,000/- in other cases | |||
| 4 | 194 | Dividend for an individual shareholder | Rs. 5,000/- | Rs. 10,000/- |
| 5 | 194K | Income in respect of units of a mutual fund or specified company or undertaking | Rs. 5,000/- | Rs. 10,000/- |
| 6 | 194B | Winnings from lottery, crossword puzzle, etc. | Aggregate of amounts exceeding Rs. 10,000/- during the financial year | Rs. 10,000/- in respect of a single transaction |
| 7 | 194BB | Winnings from horse race | ||
| 8 | 194D | Insurance Commission | Rs. 15,000/- | Rs. 20,000/- |
| 9 | 194G | Income by way of commission, prize etc. On lottery tickets | Rs. 15,000/- | Rs. 20,000/- |
| 10 | 194H | Commission or Brokerage | Rs. 15,000/- | Rs. 20,000/- |
| 11 | 194-I | Rent | Rs. 2,40,000/- during the financial year | Rs. 50,000/- per month or part of a month |
| 12 | 194J | Fee for professional or technical services | Rs. 30,000/- | Rs. 50,000/- |
| 13 | 194LA | Income by way of enhanced compensation | Rs. 2,50,000/- | 5,00,000/- |
Tax Deducted at Source
Interest income: The exemption limit for interest income for senior citizens has increased to Rs. 1 lakh from Rs. 50,000 enhancing the financial security of the elders. on the. For others it has been raised to Rs. 50,000 from Rs. 40,000
Rent: For rental income, the TDS exemption limit is raised from Rs. 2.4 lakh to Rs. 6 lakh. This will allow the landlords to earn more in their pockets.
Professional/ Technical services: For professionals like consultants, or gig workers the limit has been raised from Rs. 30,000 to Rs. 50,000.
Investments: For individuals who have invested in the stock market and mutual fund units or specified company/undertakings, it has been increased from Rs. 5,000 to Rs. 10,000.
Tax Collected at Sources
The TCS limit Under Liberalised Remittance Scheme (LRS), the limit has been increased for cross-border transactions from Rs. 7 lakh to Rs. 10 lakh. Educational Loans from specified institution are now fully exempt from TCS. Previously, Educational loan above 7 lakh was charged with 0.5% of the amount and for self-financed education transactions, 5% was charged for amounts exceeding Rs. 7 lakh.
These changes have made it easier for students who want to study abroad and help them manage their educational expenses. Additionally, the removal of TCS on educational loans will lessen the financial burden on students.
| Changes in TCS Sections | |||
| Section | Transaction | Existing Structure | Budget 2025 |
| 206C(1) | TCS on Timber | 2.50% | 2% |
| TCS on forest produce obtained under forest lease | 2.50% | 2% | |
| 206C(1G) | TCS on LRS | 0% upto Rs. 7,00,000 | 0% upto Rs. 10,00,000 |
| TCS on LRS for education purpose (funded by loan from specified Financial Institution) | 0.5% after 7 Lakh | 0% | |
| 206C(1H) | TCS on sale of goods | 0.10% | 0% |
Other Changes in TCS
TCS provisions under section 206C(1H) on the sale of goods are proposed to be withdrawn with effect from 01-04-2025.
TCS rate on timber is proposed to be reduced from 2.5% to 2%.
