The Income Tax Department has announced significant changes in the Tax Deducted at Source (TDS) provisions, set to take effect from April 1, 2025. These amendments primarily focus on increasing threshold limits, revising tax rates, and modifying specific provisions. Here’s a detailed look at the changes:
Key Amendments in TDS Thresholds and Provisions
| Section No. | Income Type | Existing Threshold | Revised Threshold (w.e.f 01st April 2025) |
| 193 | Interest on securities | Rs. 5,000 | Rs. 10,000 |
| 194 | Dividends | Rs. 5,000 | Rs. 10,000 |
| 194A | Interest other than interest on securities (other than senior citizens) – if payer is banking company, co-op society engaged in business of banking, or post office | Rs. 40,000 | Rs. 50,000 |
| In any other case | Rs. 5,000 | Rs. 10,000 | |
| In case of senior citizens | Rs. 50,000 | Rs. 1,00,000 | |
| 194B | Winnings from lotteries, crosswords, puzzles, etc. | Rs. 10,000 during FY | Rs. 10,000 for a single transaction |
| 194BB | Winnings from horse racing | Rs. 10,000 during FY | Rs. 10,000 for a single transaction |
| 194D | Insurance commission | Rs. 15,000 | Rs. 20,000 |
| 194G | Sale of lottery tickets | Rs. 15,000 | Rs. 20,000 |
| 194H | Commission or brokerage | Rs. 15,000 | Rs. 20,000 |
| 194I | Rent | Rs. 2,40,000 in a financial year | Rs. 50,000 for a month or part of a month |
| 194J | Fees for professional or technical services | Rs. 30,000 during the financial year | Rs. 50,000 during a month |
| 194K | Income in respect of units | Rs. 5,000 | Rs. 10,000 |
| 194LA | Payment of compensation on acquisition of certain immovable property | Rs. 2,50,000 | Rs. 5,00,000 |
| 194LBC | Income in respect of investment in securitization trust | 25% (for Individual or HUF), 30% (for others) | 10% (for all) |
| 194S | Transfer of Virtual Digital Asset | Exempted from provisions of Sections 203A & 206AB | Omission of this exemption |
| 206AB & 206CCA | Special provision for deduction of tax at source for non-filers of income tax return | Higher of: 1) Twice the rate specified in the relevant section 2) Twice the rates in force 3) 5% | Omitted |
The threshold for interest on securities (Section 193) has been increased from Rs. 5,000 to Rs. 10,000, providing relief to small investors by doubling the exemption limit. Similarly, dividends (Section 194) will now be exempt from TDS up to Rs. 10,000 instead of Rs. 5,000, benefiting investors receiving dividend income.
For interest other than interest on securities (Section 194A), if the payer is a banking company, cooperative society engaged in banking, or a post office, the exemption limit has been raised from Rs. 40,000 to Rs. 50,000. In other cases, the limit has been increased from Rs. 5,000 to Rs. 10,000. Notably, senior citizens will now enjoy a higher exemption, as the threshold has been doubled from Rs. 50,000 to Rs. 1,00,000, allowing more tax-free interest income.
Regarding winnings from lotteries, crossword puzzles, and similar games (Section 194B), TDS will now be deducted on a per-transaction basis rather than annually, keeping the threshold at Rs. 10,000. The same change applies to winnings from horse racing (Section 194BB), ensuring that each large individual winning is taxed separately to prevent tax avoidance.
For insurance commission (Section 194D), the exemption limit has been raised from Rs. 15,000 to Rs. 20,000, providing relief to insurance agents. A similar change applies to the sale of lottery tickets (Section 194G) and commission or brokerage (Section 194H), with the exemption limit increased to Rs. 20,000 in each case.
A major revision in rent (Section 194I) now subjects monthly rental payments exceeding Rs. 50,000 to TDS. Previously, TDS was applicable only if the total rent in a financial year exceeded Rs. 2,40,000. This change impacts both landlords and tenants, requiring more frequent tax deductions.
For professional and technical services (Section 194J), the previous annual exemption of Rs. 30,000 has been replaced with a monthly exemption of Rs. 50,000, meaning that professionals receiving over Rs. 50,000 in a single month will now face TDS deductions.
The income from units (Section 194K) threshold has doubled from Rs. 5,000 to Rs. 10,000, benefiting small investors in mutual funds and unit-linked income. Similarly, for compensation on the acquisition of immovable property (Section 194LA), the threshold has increased from Rs. 2,50,000 to Rs. 5,00,000, easing tax burdens for landowners receiving compensation.
A significant change has been introduced for income from investment in securitization trusts (Section 194LBC). Previously, TDS was levied at 25% for individuals and HUFs and 30% for others. This has now been standardized to 10% for all, making investments in securitization trusts more attractive.
For virtual digital assets (Section 194S), the exemption from provisions of Sections 203A and 206AB has been omitted, bringing digital asset taxation in line with other financial transactions.
Additionally, special provisions for non-filers (Sections 206AB & 206CCA) have been removed. Previously, non-filers were subject to higher TDS rates—either twice the specified rate or 5%, whichever was higher. This omission simplifies tax deduction and ensures uniform TDS rates.
Read More: GST On E-procurement Transaction Fee Collected On Behalf Of State Govt: AAAR
