TDS on rent up to Rs 6 lakh, relief for rental income earners
New Delhi, Feb 1, 2025
Finance Minister Nirmala Sitharaman on Saturday announced key changes to tax deduction at source (TDS) in the Budget for 2025-26, easing compliance for senior citizens and those earning rental income.
The annual TDS exemption limit on rental income has been increased from ₹2.4 lakh to ₹6 lakh. “This will reduce the number of transactions liable to TDS, thus benefiting small taxpayers receiving small payments,” Sitharaman said in her Budget speech.
She also outlined plans to simplify the TDS framework by reducing the number of rates and raising threshold amounts. “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,” she said.
Budget 2025: Key TDS changes
Senior citizens: The tax-free interest income limit for senior citizens has been doubled from ₹50,000 to ₹1 lakh.
Rent: The TDS threshold on rental income has been increased from ₹2.4 lakh to ₹6 lakh annually.
Remittances: The tax collection at source (TCS) threshold for remittances under the Liberalised Remittance Scheme (LRS) has been raised from ₹7 lakh to ₹10 lakh.
Higher TDS for non-PAN holders: The provision of higher TDS will apply only if the taxpayer does not have a Permanent Account Number (PAN).
The government has also removed TCS on remittances for education loans, a move expected to benefit students and parents. The TCS requirement on goods transactions has also been withdrawn, and TDS rates have been revised for better clarity.
Adhil Shetty, CEO of BankBazaar.com, said the tax changes simplify compliance and reduce the burden on taxpayers. “By making taxation more transparent and accessible, these measures encourage financial participation, ensuring stability and growth,” he said.
The increase in the tax-free interest income limit is expected to help retirees who rely on fixed deposits and small savings schemes. The higher TDS threshold on rent will reduce compliance costs for both tenants and landlords.
These tax revisions are part of a broader effort to simplify tax compliance while maintaining revenue collection.
Sandeep Chilana, Managing Partner, CCLaw welcomed the move to ease the compliance burden on smaller businesses and individuals. "The planned rationalization of TDS rates—by streamlining various categories into fewer, more uniform slabs—will significantly reduce confusion and compliance complexity across different sectors,” he said.
[The Business Standard]
