In the Union Budget 2025-26, Union Finance Minister Nirmala Sitharaman proposed to ease and simplify tax deducted at source (TDS) and tax collected at source (TCS).
Sitharaman proposed to increase the annual limit for TDS on rent to Rs 6 lakh from Rs 2.4 lakh. She also proposed to remove TCS on education loans up to Rs 10 lakh from specified financial institutions.
“This will reduce the number of transactions liable to TDS, thus benefitting small taxpayers receiving small payments,” said Sitharaman.
The concept of TDS was introduced with the aim to collect tax at the very source of the income for specific types of payments such as rent, professional fees, sale of property, etc. The person receiving the money has to pay TDS to the government. In the run-up to the budget, there had been expectations for the further rationalisation of the TDS regime.
Sitharaman also proposed to raise the threshold to collect tax at source on remittances under RBI’s Liberalised Remittance Scheme from Rs 7 lakh to Rs 10 lakh
Sitharaman proposed to double the limit for tax deduction on interest for senior citizens from Rs 50,000 to Rs 1 lakh.
Among the relaxations in norms, Sitharaman proposed that higher TDS will only apply in non-PAN cases.
Following the decriminalisation of the TDS’ delayed filing in last year’s budget, Sitharaman proposed to provide the same relaxation to TCS as well.
to increase the threshold of TDS on rent on to Rs 6 lakh from Rs 2.4 lakh. She also proposed to remove TCS on education loans to the tune of Rs 10 lakh from specified financial institutions.
Among the relaxations in norms, Sitharaman proposed that higher TDS will only apply in non-PAN cases.
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Budget 2025: 3 big changes to ease TDS and TCS burden on Indians
