Almost every business is liable for deduction of tax at source in present scenario. Even Individuals are not spared from deduction of tax in few cases, even though they have not obtained TAN. If you are any person doing any financial transaction during the year for your business or any specific non-business transaction, then you must know the changes brought in by the provisions of Finance Act 2025. Following are the implemented changes-
| Sl. | Section | Rate | Current threshold | Amended threshold |
| 1. | 193 – Interest on securities | 10% | Nil | Rs.10,000/- |
| 2. | 194 – Dividend for an individual shareholder | 10% | Rs.5,000/- | Rs.10,000/- |
| 3. | 194B – Winnings from lottery, crossword puzzle, etc. | 30% | Aggregate exceeding Rs.10,000/- during the financial year | Rs.10,000/- in respect of a single transaction |
| 4. | 194BB – Winnings from horse race | |||
| 5. | 194D – Insurance commission | 2% (01.04.25) | Rs.15,000/- | Rs.20,000/- |
| 6. | 194G – Income by way of commission, prize etc. on lottery tickets | 2% (01.10.24) | Rs.15,000/- | Rs.20,000/- |
| 7. | 194H – Commission or brokerage | 2% (01.10.24) | Rs.15,000/- | Rs.20,000/- |
| 8. | 194-I Rent | 2% or 10% – as applicable | Rs.2,40,000/- during the financial year | Rs.50,000/- per month or part of a month |
| 9. | 194J – Fee for professional or
technical services |
2% – FTS etc.
10% – Others |
Rs.30,000/- | Rs.50,000/- |
| 10. | 194K – Income in respect of units of a mutual fund or specified company or undertaking | 10% | Rs.5,000/- | Rs.10,000/- |
| 11. | 194LA – Income by way of
enhanced compensation |
10% | Rs.2,50,000/- | Rs.5,00,000/- |
| 12. | 194LBC – Income payable by securitization trust | 25% – Individual/HUF
30% – Any other person |
10% – Individual/HUF
10% – Any other person |
|
| TCS | ||||
| 13. | Timber or any other forest produce (not being tendu leaves) obtained under a forest lease | 2.5% | 2% | |
| 14. | Timber obtained by any mode other than under a forest lease | 2.5% | 2% | |
There is a major overhaul of Section 194A and it is dealt herewith separately
| Sl. | Payer | Current threshold to deduct TDS (Rs.) | Amended threshold to deduct TDS (Rs.) | Current threshold when payee is senior citizen (Rs.) | Amended threshold when payee is senior
citizen (Rs.) |
| 1. | A banking company to which the Banking Regulation Act, 1949 applies | 40,000/- | 50,000/- | 50,000/- | 1,00,000/- |
| 2. | A co-operative society engaged in carrying on the business of banking | 40,000/- | 50,000/- | 50,000/- | 1,00,000/- |
| 3. | on any deposit with post office under any scheme framed by the Central Government & notified in this behalf | 40,000/- | 50,000/- | 50,000/- | 1,00,000/- |
| 4. | Any other case | 5,000/- | 10,000/- | 5,000/- | 10,000/- |
| 5. | A cooperative society referred to in section 194A(3)(v) and 194(3)(via) | 40,000/- | 50,000/- | 50,000/- | 1,00,000/- |
Reduction in compliance burden by omission of TCS on sale of specified goods
Section 206C(1H) of the Act, requires any person being a seller who receives consideration for sale of any goods of the value or aggregate of value exceeding Rs.50 lakhs in any previous year, to collect tax from the buyer at the rate of 0.1% of the sale consideration exceeding Rs.50 lakhs, subject to certain conditions.
Section 194Q of the Act, requires any person being a buyer, to deduct tax at the rate of 0.1%, on payment made to a resident seller, for the purchase of any goods of the value or aggregate of value exceeding Rs.50 lakhs in any previous year.
These provisions are creating confusion amongst the tax payers. In order to eliminate the confusion, these provisions have been amended to remove TCS under section 206C(1H) and only TDS under 194Q will apply in this nature of transaction.
Removal of higher TDS/TCS for non-filers of return of income
Section 206AB and 206CCA of the Act, requires deduction of tax at higher rate when the deductee specified therein is a non-filer of income-tax return. Section 206CCA of the Act, requires for collection of tax at higher rate when the collectee specified therein is a non-filer of income-tax return.
Accordingly, to address this issue and reduce compliance burden for the deductor/collector, section 206AB and 206CCA of the Act have been omitted. Now, higher rate of TDS will apply only in case of non-furnishing of PAN and non-filers of Income tax return are relieved from this burden.
These amendments have taken effect from the 1st day of April, 2025.
Exemption from prosecution for delayed payment of TCS in certain cases
Section 276BB of the Act provides for prosecution in case of failure to pay the tax collected at source to the credit of Central Government.
This provision is amended to provide that the prosecution shall not be instituted against a person covered under the said section, if the payment of the tax collected at source has been made to the credit of the Central Government at any time on or before the time prescribed for filing the quarterly statement under proviso to section 206C(3) of the Act in respect of such payment.
This amendment has taken effect from the 1st day of April, 2025.
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