Budget 2025: TDS limit for rent payment raised to ₹6 lakh; no TCS on remittances for study abroad

Union Budget 2025: Finance Minister Nirmala Sitharaman during Budget 2025 proposed to rationalise tax deduction at source (TDS) by reducing the number of rates and thresholds above which TDS is deducted .

She introduced a number of key reforms with regards to rent payments, remittances, higher education, sale of goods and decriminalisation of offenders.

Senior citizens: Limit for tax deduction on interest for senior citizens has been raised from ₹50,000 to ₹1 lakh.

Rent payment: The annual limit of 2.40 lakh for TDS on rent is raised to ₹6 lakh.

This means while tenants are supposed to deduct TDS on rent given at the rate of ₹20,000 a month was to be deducted. Now the limit is raised to ₹50,000.

This is supposed to reduce the number of transactions liable to TDS, thus helping small taxpayers receiving small payments.

Remittances: The threshold to collect tax at source on remittances under RBI's liberalised remittance scheme (LRS) is proposed to be increased from ₹7 lakh to ₹10 lakh.

Higher education: And when someone is paying on remittance for education purposes from a loan taken from a bank, there would be no TCS. The provisions of the higher TDS deduction will apply only in non-PAN cases.

Sale of goods: Currently both TDS and TCS apply on transactions relating to sale of goods. She proposed to omit the TCS.

No criminal penalty: In July 2024, the delay for payment of TDS up to the due date of filing statement was decriminalized. The same relaxation was extended to TCS provisions too.