Big TDS-TCS rule changes from April 1; higher rent exemption, major relief for senior citizens
The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, introduced significant changes to the TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) rules. These new regulations, effective from April 1, 2025, are aimed at simplifying the tax regime and providing substantial relief to taxpayers, including senior citizens, tenants, and individuals sending money abroad.
1. No TDS on Rent up to ₹6 Lakh
In a major relief for tenants, the TDS exemption limit on house rent has been increased from ₹2.4 lakh to ₹6 lakh annually. This means that if you are paying rent up to ₹50,000 per month to your landlord, you won’t need to deduct TDS. However, for rent exceeding this limit, TDS will still apply.
2. TDS Relief for Senior Citizens
The new rules bring good news for senior citizens as well. Now, senior citizens will not be required to pay TDS on interest income up to ₹1 lakh in a financial year, up from the previous limit of ₹50,000. This move aims to reduce the tax burden on senior citizens and increase their disposable income. For other taxpayers, the TDS exemption limit on interest income has been raised from ₹40,000 to ₹50,000.
3. Increased TDS Limit on Dividends from Mutual Funds and Stocks
The TDS exemption on dividends from mutual funds and stocks has also been revised. Earlier, TDS was applicable if dividend income exceeded ₹5,000 annually. Now, this threshold has been doubled to ₹10,000. Investors earning up to ₹10,000 in dividends will not have TDS deducted, offering more flexibility and benefits to retail investors.
4. TCS Relief on Overseas Money Transfers
The government has also revised the TCS rules for sending money abroad under the Liberalised Remittance Scheme (LRS). The exemption limit has been raised from ₹7 lakh to ₹10 lakh for general transactions. Moreover, if the remittance is for a specific education loan, no TCS will be levied, whereas earlier, transactions over ₹7 lakh attracted a 0.5% TCS.
How These Changes Will Benefit Taxpayers
These amendments are expected to ease compliance and provide financial relief across different sections of society. Senior citizens will benefit from increased savings on interest income, tenants will find renting more affordable, investors will enjoy higher returns without immediate tax deductions, and those sending money abroad will save on transaction costs.
As these rules come into effect from April 1, taxpayers should reassess their financial strategies to make the most of the new tax benefits.