Quick Summary
Q.1 What are the main changes in Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) proposed by the Budget 2025?
Ans. (i) To improve ease of doing business and better compliance by taxpayers, certain rates of TDS and TCS has been rationalized.
(ii) Threshold limit for applicability of the TDS and TCS provisions has also been increased.
Q.2 What are the changes proposed in Finance Bill, 2025 with regard to rates of TDS and TCS?
Ans. Following changes are proposed in the rates of TDS and TCS:
| S.No | Section of the Act | Existing TDS/TCS Rate | ProposedTDS/TCS Rate |
| 1 | Section 194LBC - Income in respect of investment in securitization trust | 25% if payee is Individual or HUF and 20% otherwise | 10% |
| 2 | Sub-section (1) of section 206C - TCS on Timber or any other forest produce (not being tendu leaves) obtained under a forest lease and timber obtained by any mode other than under a forest lease | 2.5% | 2% |
| 3 | Sub-section (1G) of section 206C - TCS on remittance under LRS for purpose of education, financed by loan from financial institution | 0.5% after Rs. 7 lakh | Nil |
Q.3 What are the changes proposed in Finance Bill, 2025 with regard to threshold of TDS and TCS?
Ans. Following changes are proposed in the threshold of TDS and TCS:
| S. No. | Section of the Act | Present TDS/TCSthreshold (in Rs.) | Proposed TDS/TCS threshold (in Rs.) |
| 1 | 193 - Interest on securities | Nil | 10,000/- |
| 2 | 194A - Interest other than Interest on securities |
(i) 50,000/- for senior citizen; (ii) 40,000/- in case of others when payer is bank, cooperative society and post office (iii) 5,000/- in other cases |
(i) 1,00,000/- for senior citizen (ii) 50,000/- in case of others when payer is bank, co-operative society and post office (iii) 10,000/- in other cases |
| 3 | 194 - Dividend, for an individual shareholder | 5,000/- | 10,000/- |
| 4 | 194K - Income in respect of units of a mutual fund or specified company or undertaking | 5,000/- | 10,000/- |
| 5 | 194B - Winnings from lottery, crossword puzzle etc. | Aggregate of amounts exceeding10,000/- during the financial year | 10,000/- in respect of a single transaction |
| 6 | 194BB - Winnings fromhorse race | ||
| 7 | 194D - Insurance commission | 15,000/- | 20,000/- |
| 8 | 194G - Income by way of commission, prize etc. on lottery tickets | 15,000/- | 20,000/- |
| 9 | 194H - Commission or brokerage | 15,000/- | 20,000/- |
| 10 | 194-I Rent | 2,40,000/- during the financial year | 50,000/- per month or part of a month |
| 11 | 194J - Fee for professional or technical services | 30,000/- | 50,000/- |
| 12 | 194LA - Income by way of enhanced compensation | 2,50,000/- | 5,00,000/- |
| 13 | 206C(1G)- Remittance under LRS and overseas tour program package | 7,00,000/- | 10,00,000/- |
Q.4 From when will these changes be made applicable?
Ans. These changes will be effective from 01.04.2025.
The main goals are to improve the ease of doing business and enhance compliance by taxpayers through rationalised rates and increased threshold limits for TDS and TCS.
Changes are proposed for Section 194LBC (investment in securitisation trust), Section 206C(1) (TCS on timber), and Section 206C(1G) (TCS on LRS remittances for education).
The threshold limit for Section 193 (Interest on securities) is changing from Nil to Rs. 10,000/-.
The threshold for Section 194 (Dividend for an individual shareholder) is proposed to be increased from Rs. 5,000/- to Rs. 10,000/-.
These changes will be effective from 01.04.2025.
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