Revised TDS / TCS Rates effective from 01st April 2025

​Effective April 1, 2025, the Indian government has implemented significant changes to the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions under the Income Tax Act. These amendments aim to simplify tax compliance, reduce administrative burdens, and promote ease of doing business. Taxpayers must familiarize themselves with these updates to ensure compliance and optimize their tax planning strategies.​

Revised TDS Rates and Thresholds:

1. Interest Income (Section 193 & 194A):

   • For interest on securities, the TDS exemption limit is now ₹10,000.​

   • Interest from banks, post offices, and cooperative societies has an exemption threshold of ₹1,00,000 for senior citizens and ₹50,000 for others.​

   • Interest from other entities has an exemption limit of ₹10,000.​

2. Dividend Income (Section 194):

   • TDS applies to dividend payments exceeding ₹10,000, increased from the previous ₹5,000 threshold.​

3. Rent (Section 194I):

   • The TDS threshold for rent has been revised to ₹6,00,000 annually, replacing the earlier limit of ₹2,40,000.​

4. Professional Fees (Section 194J):

   • TDS will be deducted on professional fees exceeding ₹50,000, up from the previous ₹30,000 limit.​

5. Insurance Commission (Section 194D):

   • The exemption limit for TDS on insurance commission has been increased to ₹20,000 from ₹15,000.​

6. Winnings from Lotteries and Horse Races (Sections 194B & 194BB):

   • TDS at 30% will be applicable on winnings exceeding ₹10,000 in a single transaction, rather than aggregating amounts over the financial year.​

7. Payments to Partners (Section 194T):

   • A new provision mandates a 10% TDS on payments exceeding ₹20,000 made to partners, including remuneration, commission, and interest on capital.​

Revised TCS Provisions:

1. Sale of Goods (Section 206C(1H)):

   • The requirement for sellers to collect TCS on sales exceeding ₹50 lakh has been removed to prevent duplication where TDS under Section 194Q is applicable.​

2. Liberalized Remittance Scheme (LRS) (Section 206C(1G)):

   • The threshold for TCS on foreign remittances under LRS for education and medical treatment has been raised from ₹7 lakh to ₹10 lakh.​

   • No TCS will be collected on remittances for education funded by loans.​

Removal of Higher TDS/TCS Rates for Non-Filers:

Sections 206AB and 206CCA, which mandated higher TDS and TCS rates for non-filers of income tax returns, have been omitted. This change simplifies compliance, as deductors and collectors no longer need to verify the tax-filing status of deductees or collectees.​

Implications for Taxpayers:

These amendments are designed to ease compliance and reduce the administrative load on taxpayers. By increasing threshold limits and removing redundant provisions, the tax system becomes more efficient and user-friendly. Taxpayers should familiarize themselves with these changes to ensure proper compliance and optimize their tax planning strategies.​

Staying informed about these updates is crucial for effective financial planning and adherence to tax regulations.