BUDGET
TDS floor hiked, late tax collected at source payment decriminalised
This story was originally published at 15:10 IST on 1 February 2025
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NEW DELHI – The Union Budget for the financial year 2025-26 (Apr-Mar) proposes to rationalise the tax-deducted-at-source structure, with threshold amounts being raised for "better clarity and uniformity". As per the proposals, the limit for tax deduction on interest for senior citizens is to be doubled to INR 100,000, while the annual limit for tax deducted at source on rent is being raised sharply to INR 600,000 from INR 240,000.
"This will reduce the number of transactions liable to TDS, thus benefiting small taxpayers receiving small payments," Finance Minister Nirmala Sitharaman said on Saturday in her Budget speech. In addition, tax collected at source will no longer apply to transactions relating to the sale of goods, while "the provisions of the higher TDS deduction will now apply only in non-PAN (permanent account number) cases", Saitharaman added.
"The rationalisation of TDS and TCS provisions is indeed a welcome step," said Amit Singhania, partner at Areete Law Offices. "The scrapping of TCS provision on goods particularly will provide necessary relief and certainty to corporate taxpayers. The increase in exemption threshold for TDS provisions will provide relief for small taxpayers and obviate the need to provide declaration of 15G/15H for non-applicability of TDS."
The Budget also proposes to decriminalise delayed payment of tax collected at source, in line with the move made for tax deducted at source in July. End
Reported by Siddharth Upasani
Edited by Rajeev Pai
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