Finance Minister Raises TDS Limit to Rs 10 Lakh; Withdrawals from NSS Accounts Now Tax-Free

Finance Minister Announces Major Tax Reforms in Budget 2025

In her Union Budget 2025 speech, Finance Minister Nirmala Sitharaman introduced a series of tax relief measures. One of the key announcements was that income up to Rs 12 lakh will now be exempt from taxation. This move is expected to directly benefit middle-class taxpayers by increasing their disposable income. Additionally, the budget brings favorable provisions for farmers and young entrepreneurs.

Key Benefits for Senior Citizens and Taxpayers

The Finance Minister also announced an extension for filing updated tax returns, now allowing taxpayers up to four years instead of the previous two years. Furthermore, senior citizens will enjoy an increase in the tax deduction limit on interest income, which has been doubled to Rs 1 lakh.

In another significant move, the threshold for Tax Deducted at Source (TDS) on rent payments has been increased from Rs 2.40 lakh to Rs 6 lakh, while the tax benefit period for startups has been extended to five years.

Revised Income Tax Slabs

To simplify taxation, the government has introduced a new income tax structure:

• Income up to Rs 4 lakh: No tax

• Income between Rs 4 lakh and Rs 8 lakh: 5%

• Income between Rs 8 lakh and Rs 12 lakh: 10%

• Income between Rs 12 lakh and Rs 16 lakh: 15%

• Income between Rs 16 lakh and Rs 20 lakh: 20%

• Income between Rs 20 lakh and Rs 24 lakh: 25%

• Income above Rs 24 lakh: 30%

This restructuring aims to offer relief to the middle-class population, reducing their tax burden significantly.

Tax-Free Withdrawals from National Savings Scheme (NSS)

Another major highlight of the budget is the exemption of tax on withdrawals from National Savings Scheme (NSS) accounts, effective from August 2024. Additionally, delays in Tax Collected at Source (TCS) payments beyond the due date will no longer be considered a criminal offense. Moreover, remittances for educational loans will now be exempt from TCS.

Summary of Key Announcements:

• The interest deduction limit for senior citizens has been raised from Rs 50,000 to Rs 1 lakh.

• The TDS threshold on rental income has been increased from Rs 2.40 lakh to Rs 6 lakh.

• The TCS limit under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS) has been raised from Rs 7 lakh to Rs 10 lakh.

• Higher TDS rates will only apply to individuals without a PAN card.

These changes reflect the government's commitment to reducing tax burdens and encouraging economic growth by enhancing financial flexibility for taxpayers.