The Budget 2025 has brought significant reforms to the Tax Deduction at Source (TDS) provisions under the Income Tax Act, 1961, aiming to simplify compliance for businesses and individuals. These amendments primarily focus on raising threshold limits and introducing new provisions to enhance efficiency and ease the taxation process. This article provides a clear and concise overview of the key TDS changes, making it easier to understand.
– Insertion of New Section
- 194T – Section 194T was introduced in Budget 2024. Under this newly introduced Section, 194T requires firms and LLPs to deduct TDS at the rate of 10% if the payments made to partners are more than Rs. 20,000 in a financial year. This section covers all commissions, remuneration, bonuses, salary, or interest payments to partners.
– Changes in Threshold limits for TDS –
| Sr. No | Section | Before 1st April 2025 | After 1st April 2025 |
| 1 | 193 – Interest on Securities | NIL | 10,000 |
| 2 | 194A – Interest other than Interest on Securities | (i) 50,000 for Senior Citizens.
(ii) 40,000 for Others [Banks, Co-operative Societies, Post Offices] (iii) 5,000 in Other Cases |
(i) 1,00,000 for Senior Citizens.
(ii) 50,000 for Others [Banks, Co-operative Societies, Post Offices] (iii) 10,000 in Other Cases |
| 3 | 194 – Dividend for an Individual shareholder | 5,000 | 10,000 |
| 4 | 194K – Income from Mutual Fund Unit | 5,000 | 10,000 |
| 5 | 194D – Insurance Commission | 15,000 | 20,000 |
| 6 | 194H – Commission or Brokerage | 15,000 | 20,000 |
| 7 | 194I – Rent | 2,40,000 [For year] | 50,000 [For Month] |
| 8 | 194J – Professional / Technical Fees | 30,000 | 50,000 |
Major Highlights of the TDS Amendments
- I) Omission Of Sections 206AB & 206CCA
Sections 206AB & 206CCA required a higher TDS and TCS rates for non-filers i.e., individuals who do not file tax returns. It was a burden on the deductors and collectors to identify such non-filers and furnish returns within the specified due date.
From April 1, 2025 both the sections will be removed. Hence, there is no need now for businesses to verify if the person has filed tax returns or not in order to determine the TDS or TCS rates. This simplifies compliance and reduces the burden of the businesses.
– Changes in Threshold limits for TCS –
| Sr. No | Section | Before 1st April 2025 | After 1st April 2025 |
| 1 | 206C(1G) – Remittance under LRS and overseas tour program package | 7,00,000 | 10,00,000 |
| 2 | 206C(1G) – Remittance under LRS for education if financed through educational loans | 7,00,000 | No TCS Applicable |
| 3 | 206C(1H) – Purchase of Goods | 50,00,000 | No TCS Applicable |
India Business Head
Mrs. Dipali Phadke is a qualified Chartered Accountant with more than 20+ years of experience in the field of Accounting, Taxation and Payroll. She is the backbone of Company’s Operations and heads India Business at Finsmart Accounting
