New TDS/TCS Rules 2025: The new Income Tax Bill has made several changes in the TDS (tax deduction at source) and TCS (tax collection at source) rules. These changes have been announced this year in 2025 and will be implemented from April 1, 2025. The bill proposes to increase the tax limit for various provisions.
The bill proposes to increase the tax threshold for various provisions. TDS is applicable on various payments based on specified thresholds and rates. These reforms are aimed at making tax compliance easier for taxpayers and traders, eliminating unnecessary complexities in the coming years.
One of the important changes is the increase in TCS on foreign remittances under the Liberalised Remittance Scheme (LRS), which has increased from 20% to 22% for amounts above ₹7 lakh per annum. This will have a greater impact on foreign education, travel and investments. “Cryptocurrency/NFT transactions are now subject to 1% TDS under section 194S, “Cryptocurrency/NFT transactions are now subject to 1% TDS under Section 194S, which is aligned with India’s Virtual Digital Asset (VDA) regime. The most important thing to note is that freelancers and gig workers have a higher threshold, 5% TDS (Section 194J) on amounts exceeding Rs 50,000 (earlier it was Rs 1 lakh).”
Online shopping sites like Amazon, Flipkart, Myntra and many other online marketplaces will have to deduct 1% TCS on every seller transaction, including low-value sales, increasing compliance costs. Joint property buyers will also have to submit PAN details of all joint owners to avoid a uniform 20% TDS on registration,” said Abbhinav R Jain, Co-founder & Chief Financial Officer of AdCounty Media.
According to Abhinav R Jain, co-founder and chief financial officer of AdCounty Media, these new rules will impact cash flow and increase the reporting burden. For example, a family paying ₹15 lakh for education abroad or foreign travel will now have to pay TCS of ₹33,000, up from ₹30,000 earlier.
Cryptocurrency investors buying bitcoin worth ₹2 lakh will be charged TDS of ₹2,000, which will reduce liquidity a lot. Freelancers earning ₹6 lakh or more annually will be charged an advance deduction of ₹30,000, which was earlier ₹25,000, for which they will need to make budget adjustments.
Many small online sellers, even those selling as little as Rs 500, will face working capital losses due to 1% TCS. Joint home buyers may face the risk of double deduction if all PANs are not linked in time.
Some major New TDS/TCS Rules 2025 with changes for individual taxpayers
- Rate of interest on income arising to residents from securitisation trust under section 194LBC to be reduced from 25%/30% to 10%.
- Exemption is proposed from section 206AB (non-failure to higher TDS) along with section 206CCA (non-failure to higher TDS) with respective references in section 194S.
- TCS under section 206C(1G): Remittance limit under LRS and foreign tour packages to be increased from ₹7 lakh to ₹10 lakh.
- No TCS on education loan remittance under section 80E(3)(b).
These changes will take serious effect from April 1, 2025, for AY 2025-26 onwards, once the Finance Act 2025 is passed.
TAX, TDS: Changes introduced in this year Budget 2025
- Under this year, new provisions, senior citizens will be exempt from TDS on interest income up to ₹1 lakh per year, an increase from the previous limit of ₹50,000.
- The TDS exemption limit has been increase from ₹40,000 to ₹50,000 for other individuals.
- Senior citizens can now avail of a relief of up to ₹15,000, depending on their tax status.
- The Budget has increase the TDS exemption limit on rental income from ₹2.4 lakh to ₹6 lakh per year, or ₹50,000 per month, up from the earlier ₹20,000 per month.
- Investors in shares, stocks and mutual funds will also benefit from the increased TDS exemption on dividends and income from mutual fund units or specific companies, which has been increase from ₹5,000 to ₹10,000.
- The TCS thresholds have been revised under the Liberalised Remittance Scheme (LRS), benefiting individuals involved in cross-border transactions. The previous limit of ₹7 lakh has been raised to ₹10 lakh, and education loans from certain institutions are now fully exempt.
