Finance Minister Nirmala Sitharaman on Saturday proposed major changes to the Tax Deduction at Source (TDS) framework, increasing threshold limits across multiple categories to simplify compliance and ease financial burdens on taxpayers, particularly senior citizens and small taxpayers.
Announcing the changes in her Budget 2025 speech, Sitharaman said the number of TDS rates and thresholds would be rationalised to provide better clarity and uniformity.
One of the key relief measures is the increase in the TDS exemption limit on interest income on fixed deposits for senior citizens from ₹50,000 to ₹1 lakh.
The annual limit for TDS on rent payments has been raised from ₹2.40 lakh to ₹6 lakh in the financial year.
This will reduce the number of transactions liable to TDS, thus benefitting small tax payers receiving small payments,” Sitharaman said.
The exemption limit for interest on securities, which previously had no threshold, has been set at ₹10,000.
The limit for TDS deduction on dividends for individual shareholders has been doubled from ₹5,000 to ₹10,000.
The limit for brokerage and commission has been raised from ₹15,000 to ₹20,000, while the TDS threshold for professional or technical services has been hiked from ₹30,000 to ₹50,000.
For overseas remittances under the Liberalized Remittance Scheme (LRS) and overseas tour packages, the threshold for TCS (Tax Collected at Source) has been increased from ₹7 lakh to ₹10 lakh.
Full List of TDS/TCS rationalisation:
| Section of the Act | Present TDS/TCS Threshold (₹) | Proposed TDS/TCS Threshold (₹) |
|---|---|---|
| 193 – Interest on securities | Nil | 10,000/- |
| 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, cooperative society and post office; (iii) 10,000/- in other cases |
| 194 – Dividend, for an individual shareholder | 5,000/- | 10,000/- |
| 194K – Income in respect of units of a mutual fund or specified company or undertaking | 5,000/- | 10,000/- |
| 194B – Winnings from lottery, crossword puzzle etc. | Aggregate of amounts exceeding 10,000/- during the financial year | 10,000/- in respect of a single transaction |
| 194BB – Winnings from horse race | – | – |
| 194D – Insurance commission | 15,000/- | 20,000/- |
| 194G – Income by way of commission, prize etc. on lottery tickets | 15,000/- | 20,000/- |
| 194H – Commission or brokerage | 15,000/- | 20,000/- |
| 194-I Rent | 2,40,000/- during the financial year | 50,000/- per month or part of a month |
| 194J – Fee for professional or technical services | 30,000/- | 50,000/- |
| 194LA – Income by way of enhanced compensation | 2,50,000/- | 5,00,000/- |
| 206C(1G) – Remittance under LRS and overseas tour program package | 7,00,000/- | 10,00,000/- |