The government has made a big change in the tax rules in Budget 2025. The new rules of TDS-TCS related to rent, interest, mutual funds and foreign travel will come into effect from April 1. Know how this will affect your salary, investments and expenses.
TDS-TCS New Rules: The central government has given a big relief to the taxpayers in the budget 2025. Finance Minister Nirmala Sitharaman has announced to make income up to Rs 12 lakh tax free under the new tax system. Also, bank and post office deposits have been made attractive by increasing the TDS limit for senior citizens. Along with the changes made in the income tax slab, various rates of TDS have also been amended. All these new rules will come into effect from April 1.
TDS (Tax Deducted at Source) is a system of tax collection by the Indian government, in which tax is deducted at the source of income. The person or institution responsible for deducting tax has to deduct tax at the prescribed rates and deposit it in the government account.
Increased TDS and TCS limits: Know the new and old rules
The government has made changes in the limits of tax deduction at source (TDS) and tax collection at source (TCS). These changes will provide relief to the common taxpayers and the tax deduction limit will be higher than before.
| Category | Current limit | New proposed boundary |
|---|---|---|
| Rent | ₹2.4 lakh | ₹6 lakh |
| Interest on Securities | Zero | ₹10,000 |
| Interest from sources other than securities | (i) Senior citizen: ₹50,000 (ii) Payment by bank, cooperative society, post office: ₹40,000 (iii) In other cases: ₹5,000 | (i) Senior citizen: ₹1 lakh (ii) Payment by bank, cooperative society, post office: ₹50,000 (iii) In other cases: ₹10,000 |
| Amount remitted for education loan abroad (under LRS) | 0.5% above ₹7 lakh | Zero |
| Remittance for foreign travel packages and other purposes (under LRS) | ₹7 lakh | ₹10 lakh |
| Dividends for individual shareholders | ₹5,000 | ₹10,000 |
| Income earned from mutual fund units or any company/enterprise | ₹5,000 | ₹10,000 |
| Amount won in lottery, crossword puzzle, horse race | Total income above ₹10,000 in a financial year | ₹10,000 in a single transaction |
| Payment for technical/professional services | ₹30,000 | ₹50,000 |
| Income earned from increases in compensation | ₹2.5 lakh | ₹5 lakh |
What will be the impact?
The burden of tax deduction on small amounts will be reduced – For example, the rent limit has been increased from ₹ 2.4 lakh to ₹ 6 lakh, which will benefit taxpayers who receive less rent.
More exemption on interest income – Now the limit of interest income for senior citizens has been increased from ₹ 50,000 to ₹ 1 lakh, so that they can save tax even by earning more interest.
Relief on money sent abroad – The limit of money sent for education or travel abroad has been increased to ₹ 10 lakh, so that TCS will not be deducted on small transactions.
Relief to professionals – The limit of TDS deduction for technical and professional services has been increased from ₹ 30,000 to ₹ 50,000, which will benefit small professionals and freelancers.
TDS Rates: FY 2024-25 (Assessment Year 2025-26)
This chart gives the figures for the TDS amount applicable on different types of payments:
| Section | Type of payment | TDS Rate (%) |
|---|---|---|
| 192 | Salary Income | As per slab rates |
| 192A | Premature withdrawal of EPF | 10% (30% if PAN is not provided) |
| 193 | Interest on securities | 10% |
| 194 | Dividend | 10% |
| 194A | Interest earned other than Bank/Post Office | 10% |
| 194B | Income from lotteries, card games, other games | 30% |
| 194BB | Income earned from horse racing | 30% |
| 194D | Insurance commission payments | Companies: 10%, Individuals: 5% |
| 194DA | Life insurance policy payout | 5% |
| 194E | Payments to non-resident players | 20% |
| 194EE | National Savings Scheme (NSS) Deposit Withdrawal | 10% |
| 194F | Repurchase payment from Utility Trust of India/Mutual Fund | 20% |
| 194G | commission on lottery ticket sales | 5% |
| 194H | Brokerage or commission | 5% |
| 194I | Rent (Plant/Machinery) | 2% |
| 194I | Rent (land, furniture, building) | 10% |
| 194IA | Transfer of immovable property except agricultural land | 1% |
| 194IB | Fare (non-personal) | 5% |
| 194IC | Payment under Joint Development Agreement | 10% |
| 194J | Technical/Professional Service Fee | 10% or 2% |
| 194LA | Compensation on acquisition of immovable property | 10% |
| 194LB | Interest from infrastructure bonds (non-residents) | 5% |
| 194LBB | Payments by investment funds | 10% |
| 194LBC | Income from Securitisation Trust | 25% |
| 194LD | Interest from certain Government securities and bonds | 5% |
| 194N | Excess cash withdrawal from bank/post office | 2% |
| 194Q | TDS on purchase of goods above Rs 50 lakh | 0.10% |
| 206AA | When PAN is not available | highest rate applicable |
| 206AB | For not filing ITR | Dual rate or minimum 5% |
The Finance Minister has made provision for TDS exemption for senior citizens above 75 years of age. The exemption limit for interest income on bank and post office deposits has also been increased.
TDS rates for resident Indians
Below is the chart of TDS rates for income tax on select categories for the financial year 2023-2024. These rates are applicable for resident Indians.
| Type of payment | TDS Rate (%) |
|---|---|
| Payment of salaries (section 192) | Normal Slab Rate |
| Payment of dues under EPF scheme, which is taxable in the hands of the employee (section 192A) | 10% |
| Interest on securities (section 193) | 10% |
| Dividends other than those specified in section 115-O (section 194) | 10% |
| Interest earned from sources other than securities (section 194A) | 10% |
| Income from lotteries, crosswords and other games (Section 194B / Section 194BB) | 30% |
| Payment to contractor/sub-contractor (section 194C) | 1% for payments to HUF/individuals, 2% for others |
| Insurance commission (section 194D) | 5% |
| Payment of life insurance policy (section 194DA) | 1% |
| Rent (section 194-I) | 2% for plant and machinery, 10% for land, furniture and fittings |
| Payment on transfer of immovable property other than agricultural land (section 194-IA) | 1% |
TDS rates for non-residents (NRIs)
| Section | Type of payment | TDS Rate (%) |
| 192 | Salary | As per slab rates |
| 194B | Income from lotteries, games | 30% |
| 194BB | Income from horse racing winnings | 30% |
| 194EE | NSS Deposit Withdrawal | 20% |
| 194F | Repurchase payment from Mutual Fund/UTI | 20% |
| 194LB | Interest from infrastructure bonds | 5% |
| 194LD | Interest from Government Securities | 5% |
TDS Rates on Domestic Companies
| Section | Type of payment | TDS Rate (%) |
| 192 | Salary Payment | Slab Rate |
| 194 | Dividend Payments | 10% |
| 194A | interest income | 10% |
| 194C | Payment to contractor/sub-contractor | 1%-2% |
| 194H | Brokerage or commission | 5% |
| 194I | Rent (land, building) | 10% |
| 194J | Professional service fee | 10% |
| 194Q | On purchase of goods worth more than Rs 50 lakh | 0.1% |
TDS rates on foreign companies
| Section | Type of payment | TDS Rate (%) |
| 194B | Income from lotteries, card games | 30% |
| 194E | Payments to non-resident players | 20% |
| 194LB | Interest from infrastructure bonds | 5% |
| 194LC | Interest on loans in foreign currency | 5% |
| 194LD | Interest on Government Bonds | 5% |
| 195 | Other payments (long term gains, dividends, interest) | 10%-30% |
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