Effective changes from 1 April 2025 as per Budget 2025
TDS provisions have various thresholds of amount of payment or amount of income, beyond
which tax is required be deducted. It is proposed to rationalize these thresholds as below –
| S. No | Section | Current Threshold | Proposed Threshold |
| 1 | 193 – Interest on securities | Nil | ₹10,000/- |
| 2 | 194A – Interest other than Interest on securities | (i) ₹50,000/- for senior citizens (ii) ₹40,000/- for others when payer is bank, cooperative society, and post office (iii) ₹5,000/- in other cases | (i) ₹1,00,000/- for senior citizens (ii) ₹50,000/- for others when payer is bank, cooperative society, and post office (iii) ₹10,000/- in other cases |
| 3 | 194 – Dividend for an individual shareholder | ₹5,000/- | ₹10,000/- |
| 4 | 194K – Income in respect of units of a mutual fund or specified company or undertaking | ₹5,000/- | ₹10,000/- |
| 5 | 194B – Winnings from lottery, crossword puzzle, etc. | Aggregate of amounts exceeding ₹10,000/- during the financial year | ₹10,000/- in respect of a single transaction |
| 6 | 194BB – Winnings from horse race | Aggregate of amounts exceeding ₹10,000/- during the financial year | ₹10,000/- in respect of a single transaction |
| 7 | 194D – Insurance commission | ₹15,000/- | ₹20,000/- |
| 8 | 194G – Income by way of commission, prize, etc. on lottery tickets | ₹15,000/- | ₹20,000/- |
| 9 | 194H – Commission or brokerage | ₹15,000/- | ₹20,000/- |
| 10 | 194-I – Rent | ₹2,40,000/- during the financial year | ₹50,000/- per month or part of a month |
| 11 | 194J – Fee for professional or technical services | ₹30,000/- | ₹50,000/- |
| 12 | 194LA – Income by way of enhanced compensation | ₹2,50,000/- | ₹5,00,000/- |
Detail about all theses amendments is given below :
1. Interest on Securities – Section 193
Section 193 requires tax deduction on interest payments on securities to residents. Currently, no threshold limit exists for TDS deduction. The proposed amendment introduces a threshold limit of ₹10,000/- in a financial year.
| Current Provision | Proposed Amendment |
|---|---|
| No threshold limit for deduction of TDS on interest on securities. | TDS to be deducted only if interest exceeds ₹10,000/- in a financial year. |
2. Dividend Payments – Section 194
Section 194 mandates TDS at 10% on dividend payments exceeding ₹5,000/- to resident shareholders.
| Current Provision | Proposed Amendment |
|---|---|
| No TDS if the dividend paid to an individual does not exceed ₹5,000/- in a financial year. | The threshold limit is increased to ₹10,000/- per financial year. |
3. Interest Other than Interest on Securities – Section 194A
Section 194A governs TDS on interest payments (excluding securities). The amendment increases threshold limits for different types of payers.
| Payer | Current TDS Threshold | Proposed TDS Threshold | Current TDS Threshold (Senior Citizens) | Proposed TDS Threshold (Senior Citizens) |
|---|---|---|---|---|
| Banks | ₹40,000/- | ₹50,000/- | ₹50,000/- | ₹1,00,000/- |
| Cooperative banks | ₹40,000/- | ₹50,000/- | ₹50,000/- | ₹1,00,000/- |
| Post Office Deposits | ₹40,000/- | ₹50,000/- | ₹50,000/- | ₹1,00,000/- |
| Other cases | ₹5,000/- | ₹10,000/- | ₹5,000/- | ₹10,000/- |
4. Winnings from Lottery, Gambling, and Horse Race – Sections 194B & 194BB
Currently, TDS is applicable if winnings exceed ₹10,000/- in aggregate during a financial year. The proposed amendment applies TDS on winnings per transaction instead of an annual aggregate.
| Section | Current Provision | Proposed Amendment |
|---|---|---|
| 194B (Lottery, crossword puzzle, gambling, betting) | TDS applicable on aggregate winnings exceeding ₹10,000/- per financial year. | TDS applicable on winnings exceeding ₹10,000/- per single transaction. |
| 194BB (Horse race winnings) | TDS applicable on aggregate winnings exceeding ₹10,000/- per financial year. | TDS applicable on winnings exceeding ₹10,000/- per single transaction. |
5. Commissions & Brokerage – Sections 194D, 194G, and 194H
TDS threshold limits for insurance commission, lottery commission, and brokerage are increased.
| Section | Nature of Payment | Current Threshold | Proposed Threshold |
|---|---|---|---|
| 194D | Insurance Commission | ₹15,000/- | ₹20,000/- |
| 194G | Lottery Commission | ₹15,000/- | ₹20,000/- |
| 194H | Brokerage/Commission (excluding insurance) | ₹15,000/- | ₹20,000/- |
6. Rent Payments – Section 194-I
Currently, TDS applies if annual rent exceeds ₹2,40,000/-. The amendment changes the threshold to ₹50,000/- per month or part thereof.
| Current Provision | Proposed Amendment |
|---|---|
| TDS applicable if annual rent exceeds ₹2,40,000/-. | TDS applicable if monthly rent exceeds ₹50,000/- per month or part thereof. |
7. Professional & Technical Fees – Section 194J
The amendment increases the threshold for various professional and technical service payments.
| Nature of Payment | Current Threshold | Proposed Threshold |
|---|---|---|
| Professional Fees | ₹30,000/- | ₹50,000/- |
| Technical Services | ₹30,000/- | ₹50,000/- |
| Royalty | ₹30,000/- | ₹50,000/- |
| Non-compete fees under section 28(va) | ₹30,000/- | ₹50,000/- |
8. Mutual Fund & Specified Company Income – Section 194K
TDS applies to mutual fund/unit income payments exceeding ₹5,000/-. The threshold is now increased to ₹10,000/-.
| Current Provision | Proposed Amendment |
|---|---|
| TDS applies if mutual fund/unit income exceeds ₹5,000/-. | TDS applies if mutual fund/unit income exceeds ₹10,000/-. |
9. Compensation on Acquisition of Immovable Property – Section 194LA
The threshold for TDS on compensation due to compulsory acquisition of immovable property (excluding agricultural land) is increased.
| Current Provision | Proposed Amendment |
|---|---|
| TDS applicable if compensation exceeds ₹2,50,000/-. | TDS applicable if compensation exceeds ₹5,00,000/-. |
Effective Date
All amendments will come into effect from April 1, 2025.
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