Finance Minister Nirmala Sitharaman presented the Union Budget 2025 on February 1st, 2025, at 11:00 AM before the Parliament. Finance Minister Nirmala Sitharaman has proposed rationalizing Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) under the Union Budget 2025. The reforms aim to reduce tax deduction rates, increase exemption thresholds, and simplify tax collection, benefiting senior citizens, renters, and individuals making foreign remittances.
Higher Interest Exemption for Senior Citizens: The TDS exemption limit on interest earned by senior citizens has been doubled from Rs. 50,000 to Rs. 1 lakh, ensuring higher post-tax returns for retirees.
Increased TDS Limit on Rent Payments: The annual TDS threshold on rental income has been raised from Rs. 2.40 lakh to Rs. 6 lakhs, reducing the compliance burden for landlords and tenants. The existing limit is 2 Lakh per year which has been revised to Rs. 50,000/- per month or part of a month, making the effective limit 6 lakhs in a year.
Higher TCS Exemption on Foreign Remittances: The threshold for TCS on remittances under RBI’s Liberalized Remittance Scheme (LRS) has been raised from Rs. 7 lakh to Rs. 10 lakh, providing relief for individuals making international transactions.
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Streamlining TDS/TCS Rates and Thresholds: The number of TDS deduction rates and thresholds will be reduced to simplify the tax structure and improve efficiency.
Only TDS, No TCS on Goods Sale Transactions: To streamline tax collection, the government has announced that only TDS, and not TCS, will be levied on goods sale transactions, reducing complexity for businesses.
The Budget 2025 introduces simplified tax compliance for both individuals and businesses, making the tax process more efficient and hassle-free. Senior citizens and landlords will benefit from higher disposable income due to increased exemption limits, ensuring better financial security. Additionally, international remittances will become easier for travelers, students, and families, as the threshold for TCS has been raised, reducing tax liabilities on foreign transactions. Businesses will also experience a lower administrative burden when handling TDS/TCS, promoting a smoother and more efficient tax system.
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