Reetu | Feb 3, 2025 |
Budget 2025: Rationalization of TDS Threshold
The Union Budget 2025 presented in the parliament today by Finance Minister Nirmala Sitharaman. This Union Budget brought many major changes in direct taxation. From changes like introduction of new tax rate slab, basic exemption limit increased, enhancement in income tax rebate limit under section 87A to extending the time-limit for filing updated returns.
| S. No | Section | Current threshold | Proposed threshold |
| 1 | 193 – Interest on securities | Nil | Rs.10,000 |
| 2 | 194A – Interest other than Interest on securities | (i) Rs.50,000 for senior citizen; (ii) Rs.40,000 in case of others when payer is bank, cooperative society and post office (iii) Rs.5,000 in other cases | (i) Rs.1,00,000 for senior citizen(ii) Rs.50,000 in case of others when payer is bank, cooperative society and post office(iii) Rs.10,000 in other cases |
| 3 | 194 – Dividend for an individual shareholder | Rs.5,000 | Rs.10,000 |
| 4 | 194K – Income in respect of units of a mutual fund or specified company or undertaking | Rs.5,000 | Rs.10,000 |
| 5 | 194B – Winnings from lottery, crossword puzzle, etc. | Aggregate of amounts exceeding Rs.10,000 during the financial year | Rs.10,000 in respect of a single transaction |
| 6 | 194BB – Winnings from horse race | ||
| 7 | 194D – Insurance commission | Rs.15,000 | Rs.20,000 |
| 8 | 194G – Income by way of commission, prize etc. on lottery tickets | Rs.15,000 | Rs.20,000 |
| 9 | 194H – Commission or brokerage | Rs.15,000 | Rs.20,000 |
| 10 | 194-I Rent | Rs.2,40,000 during the financial year | Rs.50,000 per month or part of a month |
| 11 | 194J – Fee for professional or technical services | Rs.30,000 | Rs.50,000 |
| 12 | 194LA – Income by way of enhanced compensation | Rs.2,50,000 | Rs.5,00,000 |
Other key changes also taken place in direct taxation. TDS provisions have various thresholds of amount of payment or amount of income, beyond which tax is required be deducted. Rationalization of TDS threshold by reducing the number of rates and thresholds above which TDS is deducted, also proposed by Nirmala Sitharaman in her Budget 2025 speech.
She said, “the threshold amounts for tax deduction will be raised for better clarity and uniformity.”
The limit for tax deduction on interest for senior citizens is being doubled to Rs.1,00,000 from the current Rs.50,000. Also, the limit of Rs.2.40 lakh annually for TDS on rent is being increased to Rs.6 lakh. This enhancement will reduce the number of transactions subject to TDS, thus benefiting small tax payers receiving small payments.
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