Revised TDS Limits: Key Changes in TDS and TCS Effective April 1

With the upcoming financial year, significant modifications in Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are set to be implemented from April 1, 2025. These adjustments aim to streamline tax-related procedures, reducing the challenges previously faced by taxpayers in international transactions, high-value purchases, and business dealings. Let’s explore the crucial updates introduced in the latest budget.

Updated TDS Thresholds

TDS is deducted when individuals earn interest, pay rent, or conduct high-value transactions exceeding a specified threshold. The recent budget has proposed revisions to these limits, ensuring reduced tax deductions and improved cash flow management.

Increased Exemption Limit for International Transfers

One of the major changes includes an increase in the exemption limit for overseas remittances. Previously, remittances exceeding ₹7 lakh attracted TCS; however, this limit has now been raised to ₹10 lakh. Additionally, funds transferred abroad for educational purposes via education loans will now be exempt from TCS, providing relief to students and their families.

TCS Requirement Removed for Sales Exceeding ₹50 Lakh

For businesses dealing with large-scale transactions, the mandatory deduction of 0.1% TCS on sales exceeding ₹50 lakh has been scrapped. This move aims to ease the burden on businesses, fostering smoother financial operations.

Elimination of High TDS for Non-ITR Filers

Previously, individuals who failed to file their Income Tax Returns (ITR) were subject to higher TDS/TCS rates. Under the new budgetary provisions, this rule has been abolished, ensuring that non-filers do not face excessive tax deductions.

No More Legal Penalties for Delayed TCS Deposits

Under the existing framework, failure to deposit TCS within the stipulated time could lead to penalties, including imprisonment ranging from three months to seven years. However, the latest revision allows for delayed payments without legal consequences, provided the outstanding TCS is settled within the prescribed timeframe.

These reforms are expected to simplify tax compliance, offering significant relief to taxpayers and businesses alike while ensuring a more efficient tax collection system.