Complete TDS Rate and Threshold Limit Changes proposed in Union Budget 2025

Top Stories Complete TDS Rate and Threshold Limit Changes proposed in Union Budget 2025 The changes proposed through the Union Budget are expected to provide more expendable income to taxpayers, pushing for increased purchasing power By Avinash Kurungot – On February 2, 2025 1:31 pm – 3 mins read Union Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 in the Lok Sabha yesterday, with Speaker Om Birla presiding over the session. Among the numerous key reforms proposed in the Budget, the Union Government has proposed major changes to the  Tax Deducted at Source (TDS) provisions to simplify compliance, increase threshold limits, and rationalize TDS rates.

Providing relief to business owners, they are expected to ease compliance and reduce their tax-burden. One of the major changes have been effected to Section 194LBC of the Income Tax Act, 1961 pertaining to Income from Securitization Trusts, where the TDS rate for individuals and Hindu Undivided Families (HUFs) has been slashed from 25% to 10%, while the TDS rate applicable  for other taxpayers has been also been reduced from 30% to 10%.

Read More: FM Nirmala Sitharaman proposes Income Tax Exemption to Withdrawals from National Savings Scheme in Budget 2025 Meanwhile the threshold for TDS deduction  under Section 194D of the Income Tax Act, 1961 regarding Insurance Commission has been raised from ₹15,000 to ₹20,000, granting benefits to agents and brokers receiving commissions. Get Complete Coverage on Budget 2025-26, Click Here Similarly, the TDS deduction threshold under Section 194G on Lottery Commission and Section 194H regarding Commission or Brokerage has also been increased from ₹15,000 to ₹20,000 providing relief to taxpayers securing an earning from these sources. Read More: Budget 2025-2026: CBIC releases FAQs w.r.t. Indirect Tax Amendment Another significant revision has been introduced under Section 194J of the Act. Section 194J pertains to Fees for Professional or Technical Services where the minimum threshold for TDS deduction has been enhanced from ₹30,000 to ₹50,000, reducing tax deduction on smaller transactions and benefiting professionals across varied industries Besides slashing TDS rates, the Union Budget 2025-26 has proposed higher threshold limits for TDS applicability to ensure that values of small values are not equitably brought under tax deductions.

Get Complete Coverage on Budget 2025-26, Click Here Interest on Securities under Section 193 of the present Income Tax Act receives a new threshold limit for deductions at ₹10,000 which had been non-existent priorly. Meanwhile, for Section 194A regarding Interest on Deposits, the threshold for TDS deduction has been increased from ₹50,000 to ₹1,00,000 for senior citizens and from ₹40,000 to ₹50,000 for others, reducing tax liability for small depositors.

Read More: Budget 2025: Period of ‘Stay’ by Court to be excluded to Calculate Time Limit u/s 206C Dividends under Section 194 have also received a facelift, with the TDS threshold limit increasing from ₹5,000 to ₹10,000, offering relief to investors receiving dividends. Lottery winnings under Section 194B of the Act shall have tax deducted on individual transactions exceeding ₹10,000 instead of the previous aggregate threshold of ₹10,000 per financial year, easing compliance for the winners.

A key revision has been made to the exemption limit on rent payments under Section 194-I of the Income Tax Act, 1961, reducing the same from ₹2,40,000 per annum to ₹50,000 per month, making it more aligned with rising rental costs in the nation – rendering benefits to both landlords and tenants alike. Read More: Litigation Delays excluded from Limitation Periods for passing Income Tax Orders: FM proposes in Budget 2025 The Finance Bill 2025 has also removed the provisions under Sections 206AB and 206CCA of the Income Tax Act, 1961 which previously mandated higher TDS rates for non-filers of income tax returns. The standardization of the TDS rates render benefits to those falling under this category as well.

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