Finance Minister Nirmala Sitharaman, in the Union Budget 2025 presented on February 1, announced changes to certain TDS and TCS rules.
These revised rules will take effect from April 1, 2025. The government introduced these changes to simplify the TDS and TCS regulations.
Additionally, the limits for TCS and TDS have been revised, benefiting senior citizens, landlords, and professionals offering technical services.
The increase in the TCS limit will also be advantageous for individuals traveling abroad and those funding their children’s education overseas. Let’s understand these changes in detail.
New Rules for TDS on Interest Income
As per the new rule, senior citizens will not have to pay TDS on interest income up to ₹1 lakh in a financial year, whereas earlier, this limit was ₹50,000.
This means that if a senior citizen earns up to ₹1 lakh in interest from bank deposits in a year, the bank will not deduct TDS.
However, if the interest exceeds ₹1 lakh, TDS will be applicable. For other individuals, the TDS exemption limit has been raised from ₹40,000 to ₹50,000.
New Rules for TDS on House Rent
The government has raised the TDS limit on rental income from ₹2.4 lakh per year to ₹6 lakh.
This means that if your monthly rent is up to ₹50,000, you won’t have to deduct TDS while paying your landlord.
Earlier, tenants had to deduct TDS if the rent exceeded ₹20,000 per month before making the payment to the landlord.
TDS on Dividend Income
The TDS rules for stock and mutual fund investors have also been revised.
Now, TDS will be deducted only if the dividend or income from mutual fund units or specific companies/undertakings exceeds Rs 10,000.
Previously, this limit was Rs 5,000. Additionally, the TDS limit for interest earned on debentures issued by a public company has also been raised to Rs 10,000.
New TCS Rules for Sending Money Abroad
The government has raised the TCS limit under the Liberalised Remittance Scheme (LRS).
Now, individuals can send up to Rs 10 lakh abroad without incurring TCS, compared to the previous limit of Rs 7 lakh.
Additionally, no TCS will be applicable on remittances made for education loans taken from specified institutions.
Currently, a 0.5 percent TCS is charged if the education loan amount exceeds Rs 7 lakh.
