Currently, both TDS and TCS are being applied on any transaction relating to the sale of goods.
limit for tax deducted at source
Mumbai: Finance Minister Nirmala Sitharaman, in the Union Budget 2025, proposed to double the limit for tax deducted at source (TDS) on interest income for senior citizens to Rs 1 lakh. For others, the TDS limit has been increased from Rs 40,000 to Rs 50,000. Additionally, the Budget proposed raising the threshold for TDS on rent to Rs 6 lakh from the current Rs 2.4 lakh, which would significantly reduce the TDS transactions for those receiving modest rental income.
Manoj Purohit, Partner at BDO India’s Tax and Regulatory Services, commented that this change addresses a long-standing need from senior citizens. The increase in the withholding tax limit will allow senior citizens to retain a larger portion of their disposable income, rather than waiting for a tax refund.
Sitharaman also announced an increase in the threshold for tax collected at source (TCS) on remittances under the RBI's Liberalized Remittance Scheme (LRS) from Rs 7 lakh to Rs 10 lakh. This would broaden the exemption base and promote compliance. Furthermore, she proposed removing TCS on remittances for education purposes, specifically where the remittance is from a loan taken from a specified financial institution, easing the burden on students studying abroad by minimizing tax compliance.
Currently, both TDS and TCS apply to transactions relating to the sale of goods. To simplify matters, Sitharaman proposed omitting TCS in such cases, aiming to reduce compliance challenges.
TDS applies to deductions made from payments for goods and services, while TCS is the tax that sellers collect from buyers at the time of sale.
The government also plans to introduce a new income-tax bill next week. Munjal Almoula, Head of Tax at BDO India, noted that the new tax code would be designed to remove uncertainties, with the intention of simplifying the language and reducing ambiguity. The goal is to minimize litigation and offer greater certainty to taxpayers.
( Source : Deccan Chronicle )
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