Have you noticed that even after paying taxes honestly, TDS deductions still reduce your cash flow? Or that businesses spend more time checking compliance than actually running operations? If yes, you are not alone.
India’s tax system has long struggled with a dual challenge: simplifying compliance for genuine taxpayers while plugging revenue leakages where misuse was common. The latest amendments to TDS and TCS provisions strongly reflect this intent.
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This article explains crucial changes under Sections 194A, 194I, the newly introduced 194T, and the removal of complex provisions such as 206AB, 206CCA, and 206C(1H). It also covers foreign remittances, education loans, GST-related TDS mistakes, advance tax timelines, and penalty provisions.
This content is highly beneficial for bankers, chartered accountants, tax practitioners, business owners, partners in firms, salaried individuals, senior citizens, students planning overseas education, and competitive exam aspirants.
Before we dive in, watch this video for a complete breakdown:
Section 194A – Interest Income TDS: A Major Structural Relief
Interest income is one of the most common sources of income for retirees and conservative investors. However, TDS deduction often caused liquidity issues.
- Senior Citizens: Threshold increased from ₹50,000 to ₹1,00,000
- Non-Senior Citizens: Bank and post office interest limit increased to ₹50,000
- Dividend & Mutual Fund Income: Threshold increased to ₹10,000
Fewer deductions mean reduced refund dependency and better cash flow.
Special Compliance-Free Regime for Senior Citizens Aged 75+
Senior citizens aged 75 years or more are now eligible for a simplified tax regime.
- Income sources limited to pension and interest
- Interest earned from the same specified bank
The bank computes tax, applies deductions, deducts TDS, and the senior citizen is not required to file an income tax return.
Section 194I – Rent TDS: Shift from Annual to Monthly Threshold
Earlier, TDS applied when annual rent exceeded ₹2,40,000.
From 1 April 2025, TDS applies if monthly rent exceeds ₹50,000.
This brings clarity, especially for tenants in metro cities.
Section 194T – TDS on Partner Payments
Section 194T introduces TDS on payments made by firms or LLPs to partners.
- Applicable on salary, commission, interest, and remuneration
- TDS Rate: 10%
This ensures upfront tax collection and reduces defaults.
Removal of Sections 206AB and 206CCA
These sections earlier required higher TDS/TCS rates for non-filers.
With their removal, businesses no longer need to verify vendor filing status, significantly reducing compliance burden.
Section 206C(1H) Removed – No More TDS vs TCS Overlap
Earlier, large goods transactions caused confusion between buyer TDS and seller TCS.
Now, only the buyer deducts TDS under Section 194Q. Seller-side TCS obligation is removed.
Foreign Remittances and Overseas Education Relief
- LRS TCS threshold increased from ₹7 lakh to ₹10 lakh
- No TCS on foreign remittances funded through education loans
This provides major financial relief to students and families.
GST and TDS – A Common Practical Mistake
TDS should be deducted only on the base value of goods or services.
If GST is shown separately in the invoice, no TDS applies on the GST portion.
Advance Tax, Interest, and Penalty Provisions
- 1% per month interest for failure to deduct TDS
- 1.5% per month interest for failure to deposit TDS
Advance Tax Due Dates:
- 15 June
- 15 September
- 15 December
- 15 March
Future Outlook – Zero TDS Certificate for NRIs
From 1 April 2026 (proposed), NRIs with nil tax liability may apply in advance for zero TDS certificates.
This reflects increasing global mobility and taxpayer-friendly reforms.
Conclusion
These amendments reflect a balanced tax policy. Relief has been extended where compliance was burdensome, while revenue leakages have been addressed through targeted provisions.
The focus is now on smart compliance backed by technology rather than blanket complexity.
Correct implementation of these changes can save money, reduce disputes, and improve cash flow. Apply them carefully and continue exploring related content for deeper clarity.
