Are you still calculating TDS or TCS using the old rules? From April 1, 2025, India’s tax system is introducing several crucial updates that directly affect deduction, collection, and reporting responsibilities for banks and taxpayers.
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1️⃣ Overview – What Changes From April 1, 2025?
From FY 2025–26, multiple amendments have been made to simplify the tax structure. Earlier, several complex TDS and TCS provisions created confusion, but the new regime aims for simplified compliance and reduced deduction burden.
The government’s objective is clear — “Simplify, Streamline, and Strengthen Transparency.”
2️⃣ Interest Income Threshold Revised – Section 194A
The exemption limits for TDS on interest income have been increased to provide relief to small investors and senior citizens:
- For senior citizens – up to ₹1,00,000 interest per financial year exempt from TDS.
- For others – up to ₹50,000 interest per financial year exempt from TDS.
Example: If a senior citizen earns ₹85,000 as interest on fixed deposits, no TDS will be deducted now.
3️⃣ TDS on Rent – Section 194I
Now, TDS will apply only if monthly rent exceeds ₹50,000. This means rent up to ₹6,00,000 per year is fully exempt. The amendment provides major relief for individuals and small businesses renting property.
4️⃣ New Section 194T – TDS on Payments to Partners
Effective from April 1, 2025, Partnership Firms and LLPs must deduct 10% TDS on payments such as remuneration, commission, or interest made to partners. This ensures transparency and better tax reporting of partnership income.
5️⃣ Sections 206AB and 206CCA Removed
Previously, higher TDS and TCS rates applied to non-ITR filers under these sections. Both sections have now been removed. This means a uniform rate will apply to all taxpayers, reducing compliance pressure for deductors like banks and employers.
6️⃣ TCS on Overseas Remittances and Education Loans
Under the Liberalised Remittance Scheme (LRS), the threshold has been raised from ₹7 lakh to ₹10 lakh. No TCS will apply up to this limit. Similarly, remittances made for education loans are now exempt from TCS.
7️⃣ Sale of Goods – Section 206C(1H) Removed
Earlier, sellers were required to collect 0.1% TCS on sale of goods exceeding ₹50 lakh annually. This section is now completely removed, simplifying the process for both sellers and buyers.
8️⃣ TDS/TCS Correction Deadline Extended
Taxpayers can now revise or correct old TDS/TCS statements from FY 2018–19 Q4 to FY 2023–24 Q3 until March 31, 2026. This is a golden opportunity for banks and institutions to rectify earlier mismatches or reporting errors.
Continuous Cheque Clearing by Reserve Bank of India (RBI) | Latest Update 2025-26
9️⃣ Advance Tax Rules and Installment Deadlines
If your total tax liability exceeds ₹10,000 in a financial year, advance tax payment becomes mandatory. The schedule remains as follows:
- Up to June 15 – 15% of total tax
- Up to September 15 – 45%
- Up to December 15 – 75%
- Up to March 15 – 100%
Senior citizens without business income are exempt from paying advance tax.
🔟 Comparison Table – Old vs New Limits
| Particulars | Old Limit (FY 2024–25) | New Limit (FY 2025–26) |
|---|---|---|
| Interest (Non-Senior Citizen) | ₹10,000 | ₹50,000 |
| Interest (Senior Citizen) | ₹50,000 | ₹1,00,000 |
| Dividend Income | ₹5,000 | ₹10,000 |
| Rent (Section 194I) | ₹2,40,000 per year | ₹6,00,000 per year or ₹50,000 per month |
| Partner Payments (194T) | Not Applicable | 10% TDS above ₹20,000 |
| LRS TCS Limit | ₹7 lakh | ₹10 lakh |
| Sale of Goods (206C 1H) | Applicable | Removed |
| Higher TDS/TCS for Non-Filers | Applicable | Removed |
📊 Key Takeaways for Bankers & Professionals
- Always verify updated exemption limits before deducting TDS or collecting TCS.
- Ensure partner payments in firms comply with Section 194T from April 2025.
- Stop applying higher TDS/TCS rates to non-ITR filers — those provisions no longer exist.
- Update core banking and payroll software with new tax configurations.
- Keep documentation ready for any revision of old returns by March 2026.
Conclusion – Relief and Clarity for Bankers & Taxpayers
The new TDS & TCS structure effective from April 1, 2025 simplifies the taxation framework, ensuring transparency and easing compliance for both individuals and financial institutions.
Stay informed, keep your tax systems updated, and prepare smartly for the upcoming exams and financial year.
💡 Pro Tip: Watch our detailed video on these TDS & TCS amendments for complete visual understanding and practical examples.
