TDS Rates and Limit Changed from today 1st April 2025

Yes, there are changes in TDS rates and limits effective from today, April 1, 2025, as announced in the Budget 2025. These changes aim to simplify tax compliance and reduce the burden on taxpayers.

Here’s a summary of the key changes in TDS thresholds:

  • Section 193 (Interest on Securities): The threshold limit has been increased from NIL to ₹10,000 in a financial year. TDS will only be deducted if the interest exceeds this limit.
  • Section 194 (Dividend): The threshold limit for individuals has been increased from ₹5,000 to ₹10,000 per financial year.
  • Section 194A (Interest other than Interest on Securities):
    • For payments by a banking company, cooperative society engaged in banking, or a post office:
      • For senior citizens: Increased from ₹50,000 to ₹1,00,000.
      • For others: Increased from ₹40,000 to ₹50,000.
    • In any other case: Increased from ₹5,000 to ₹10,000.
  • Section 194B (Winnings from Lottery, Crossword Puzzle, etc.) & 194BB (Winnings from Horse Race): TDS will now be deducted if the winnings exceed ₹10,000 in respect of a single transaction, instead of the aggregate amount exceeding ₹10,000 during the financial year.
  • Section 194D (Insurance Commission): The threshold limit has been increased from ₹15,000 to ₹20,000.
  • Section 194G (Income by way of Commission, Prize, etc. on Lottery Tickets): The threshold limit has been increased from ₹15,000 to ₹20,000.
  • Section 194H (Commission or Brokerage): The threshold limit has been increased from ₹15,000 to ₹20,000.
  • Section 194-I (Rent): The threshold limit has been changed from ₹2,40,000 per annum to ₹50,000 per month or part of a month.
  • Section 194J (Fee for Professional or Technical Services): The threshold limit has been increased from ₹30,000 per annum to ₹50,000 during a month.
  • Section 194K (Income in respect of Units of a Mutual Fund): The threshold limit has been increased from ₹5,000 to ₹10,000.
  • Section 194LA (Income by way of Enhanced Compensation on Acquisition of Certain Immovable Property): The threshold limit has been increased from ₹2,50,000 to ₹5,00,000.
  • Section 194LBC (Income in respect of investment in securitization trust): The TDS rate has been standardized to 10% for all payees, irrespective of whether they are individuals/HUFs or other entities. Previously, the rates were 25% for individuals/HUFs and 30% for others.
  • Section 194T (Payment of any sum in the nature of salary, remuneration, commission, bonus or interest to a partner of the firm): A new section has been introduced, requiring TDS at 10% if the aggregate of such sums paid or payable exceeds ₹20,000 during the financial year.

Omission of Sections:

  • Sections 206AB and 206CCA, which provided for deduction/collection of tax at higher rates for non-filers of income tax returns, have been omitted.

Changes in TCS (Tax Collected at Source):

  • Section 206C(1G) (Remittance under LRS and Overseas Tour Program Package): The threshold limit for TCS has been increased from ₹7,00,000 to ₹10,00,000.
  • Section 206C(1G) (Remittance under LRS for Education financed through Educational Loans): TCS will no longer be applicable, irrespective of the amount.
  • Section 206C(1H) (Purchase of Goods): The provision for TCS on the sale of goods has been removed.

It’s important to note that these are just the changes in thresholds and certain provisions. The actual TDS rates for various types of payments might remain the same, although some changes in rates are also observed for specific sections like 194LBC. For detailed information on specific TDS rates for different sections, you can refer to the TDS Rate Chart for FY 2025-26 (AY 2026-27).

Regarding Income Tax slabs, the new tax regime for FY 2025-26 (AY 2026-27) proposes the following slabs:

  • ₹0 – ₹4,00,000: Nil tax
  • ₹4,00,001 – ₹8,00,000: 5%
  • ₹8,00,001 – ₹12,00,000: 10%
  • ₹12,00,001 – ₹16,00,000: 15%
  • ₹16,00,001 – ₹20,00,000: 20%
  • ₹20,00,001 – ₹24,00,000: 25%
  • Above ₹24,00,000: 30%

These changes in TDS and TCS rules and income tax slabs are significant and will impact various financial transactions from today onwards. It is advisable to understand these changes thoroughly for proper tax compliance.