Union Budget 2025: FM snips TCS Rate on Timber and Other Produce obtained under Forest Lease
The Head of The Ministry of Finance stated that the TCS rates were being reduced to reduce the multiplicity of rates and compliance burdens.
Budget 2025 India – Budget 2025 Highlights – Budget 2025 News – Budget 2025 Updates – Budget 2025 Impact – Budget 2025 Reactions – Budget 2025 – India tax reforms – Finance Minister Budget speech 2025 – Taxscan
Budget 2025 India – Budget 2025 Highlights – Budget 2025 News – Budget 2025 Updates – Budget 2025 Impact – Budget 2025 Reactions – Budget 2025 – India tax reforms – Finance Minister Budget speech 2025 – Taxscan
The Union Budget 2025-26 was presented by Finance Minister Nirmala Sitharaman before the Lok Sabha today (1 February, 2025). A notable change regarding forests and environment is the reduction of Tax Collected at Source (TCS) rates on timber and other forest produce, specifically obtained under a forest lease.
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Referring to Verse 542 of the Thirukkural, Finance Minister Nirmala Sitharaman stressed on the cohesion between the philosophical constructs of nature and that of a government. The verse reads as follows:
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வானோக்கி வாழும் உலகெல்லாம் மன்னவன்
கோல்நோக்கி வாழுங் குடி.
vaanokki vaalum ulakellaam mannavan
koalnokki vaalung kuti
Meaning:
Just as living beings live expecting rains,
Citizens live expecting good governance.
Observing the tenets laid down by Thiruvalluvar in his proposition, the Amendments proposed to Section 206C of the Finance Bill, 2025 seeks to reduce the TCS rate from 2.5% to 2% for timber or any other forest produce (not being tendu leaves) obtained under a forest lease and timber obtained by any other mode other than that of a forest lease.
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The Budget 2025-26 also recommended the rationalization of the definition of “forest produce” to carry the same meaning as provided in any State Act or the Indian Forest Act, 1927, while clarifying that only forest produce obtained under a forest lease will be subject to TCS.
The above amendments shall come into effect from April 1, 2025 among a series of other amendments. Further, Section 206AB, which provided for a higher TCS rate on non-filers of income tax returns, has been omitted, simplifying tax compliance and reducing the burden on businesses.
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