Budget 2025: Annual limit for TDS on rent to be increased from ₹2.40 lakh to ₹6 lakh

Budget 2025: In her Budget 2025-26 speech, FM Nirmala Sitharaman raised the threshold on rent to ₹6 lakh. According to details, the person responsible for paying of rent is liable to deduct tax at source.

She added that the government has proposed that two self-occupied properties, instead of just one, can be valued at ‘nil’ for tax purposes.

“This will reduce the number of transactions liable to TDS, thus benefiting small taxpayers receiving small payments,” Sitharaman said in her Budget speech.

Outlining the plans to simplify the TDS framework by reducing the number of rates and raising threshold amounts, the FM said, “I propose to rationalise tax deductions at source (TDS) by reducing the number of rates and thresholds about which TDS is deductible. Further, threshold amounts for tax deduction will be increased for better clarity and uniformity.”

Earlier, the TDS on rent, under the provisions of Section 194-I, was ₹2,40,000 for the FY 2024-25. Until FY 2018-19, the threshold limit was ₹1,80,000. The TDS on rent does not charge any education cess or secondary and higher education cess.

The provisions also stated that in case individuals and the Hindu Undivided Family (HUFs), pay the landlord rent of ₹50,000 or more per month, they are liable to deduct TDS u/s 194IB. Also, the individuals HUFs who are subject to tax audit are under an obligation to deduct the tax at source.

What else FM Sitharaman announced?

Among other things, she announced that there will be no income tax payable up to 12 lakh under new income tax regime for salaried class. Additionally, a rebate of ₹75,000 has been announced. However these will not apply to long term capital gains.

The FM also announced that the tax collection at source (TCS) threshold for remittances under the Liberalised Remittance Scheme (LRS) has been raised from ₹7 lakh to ₹10 lakh.

FM Sitharaman also removed TCS on remittances for education loans, which is move aimed at benefitting students and parents. The TCS requirement on goods transactions has also been withdrawn, and TDS rates have been revised for better clarity.